Frontera NorteSur Oct - Dec 2009

Labor Hits the Streets as the Clock Ticks to 2010

In the week leading up to the 99th anniversary celebration of the 1910 Mexican Revolution, workers across Mexico took to the streets. In the Tamaulipas border city of Reynosa, scores of former TRW maquiladora workers staged a demonstration November 10 outside the offices of the Federal Labor and Conciliation Board. Laid off from the US-based auto parts company earlier this year, the workers contended that they had not received severance pay in accordance with Mexican law.

“We’re here to pressure them so they will pay attention to us,” said worker leader Jovita Moreno.

To the southwest of Reynosa, in the industrial city of Monterrey, Nuevo Leon, about one hundred transit cops occupied department headquarters in protest of firings for alleged corruption and drug use.

By far, though, the biggest mobilizations, stretching from Chiapas on the border with Guatemala to Chihuahua bordering Texas and New Mexico, were held November 11 in support of 44,000 Mexico City-area utility company employees sacked from their jobs by presidential decree last month. In a one-day work stoppage, unions representing electricians, mineworkers, teachers and telephone workers joined with small farm, popular and student organizations to oppose the firings and restructuring of the publicly-owned Central Light and Power (LFC) company.

Almost reminiscent of the Villista and Zapatista convergence on Mexico City nearly 100 years ago, tens of thousands of people streamed into the capital city’s Zocalo Plaza from all directions to hear speakers support the Mexican Electrical Workers (SME) union representing the fired employees and call for a national strike. Solidarity messages were heard from Samuel Ruiz, former bishop of San Cristobal de las Casas in Chiapas, and Bishop Raul Vera of Coahuila.

“We are at the point of the independence bicentennial and the Mexican Revolution centennial,” said SME leader Martin Esparza. “And as before, we will defeat the transnationals, the dictatorship, tyranny and violations of the constitution. It’s time for the people to organize,” Esparza declared, adding that a new national pact and the peaceful recovery of power by the people was needed.

Actions in support of the SME were held in at least 22 states. In Chiapas, grievances also included recently approved tax hikes and the detention of farmer leaders accused of having links with armed groups. In central Mexico, highway blockades led to crack-downs by the Federal Police, while in Oaxaca, an estimated 70,000 school teachers stayed off the job.

In the north, hundreds of telephone workers, Labor Party members and social activists conducted various public marches in Chihuahua City and Ciudad Juarez, where marchers braved the border city’s violent streets and even held a torch-lit procession through the city’s downtown.

Eduardo Gonzalez Perales, secretary of the Ciudad Juarez branch of the telephone workers union, called for the restitution of the SME’s collective bargaining agreement and an end to a “business attitude” towards unions in the country.

Considering that the LFC company only serves customers in and around Mexico City, the breadth of support for the November 11 protest was significant.

The LFC issue has stirred widespread controversy in Mexico. Some polls claim a majority of Mexicans support the Calderon administration’s move against what is portrayed as a corrupt union hindering the economic progress of the nation. On the Internet, many writers back the government’s action against the allegedly overpaid, lazy union workforce, while yet others strongly support the SME’s stance that the federal government should keep its hands off the LFC and its workers.

In comments about the protest, Senator Gustavo Madero, coordinator of President Calderon’s PAN party in the Mexican Senate, said unions have a right to meet and speak out just as priests can also “call people to mass.”

Mexico’s Supreme Court rejected a request this week from SME head Esparza to investigate the government’s action.

Increasingly, Mexican labor struggles are receiving cross-border support from US and other international unions. Last month, a delegation of United Auto Worker (UAW) union members traveled from Michigan to south Texas to support the laid-off TRW workers in Reynosa and protest the North American Free Trade Agreement. While on the border, the UAW members held public demonstrations at the Hidalgo-Reynosa international crossing and later briefly blocked traffic at another bridge connecting Brownsville with Matamoros.

George Hardy, first vice-president of UAW Local 174, said: “We want jobs. We need to feed our families, but NAFTA wiped away all our jobs in Michigan and America. We are demonstrating with TRW workers because NAFTA pit workers against one another, but now we want to tell all corporations that workers are united.”

In a separate statement on the LFC conflict, United Steel Workers President Leo Gerard charged that the mass firings were additional proof of the Calderon administration’s anti-worker, anti-union agenda and its scorched earth policy against democratic and independent unions.”

Sources: La Jornada, November 11 and 12, 2009. Articles by correspondents and Notimex. El Diario de Juarez, November 12, 2009. Enlineadirecta.info, November 9 and 11, 2009. Articles by Carlos Pena Palacios and Rodolfo Sanchez Barron. El Universal, November 11, 2009. Articles by Alberto Morales, Julian Sanchez, Carlos Aviles, Jonathan Tapia, Ricardo Gomez, and Sergio Javier Jimenez.

Lapolaka.com, November 11 and 12, 2009. Proceso/Apro, November 10, 2009. Article by Sain Mandujano. AFL-CIO, November 3, 2009. Brownsville Herald/McAllen Monitor, October 5, 2009. Article by Sean Gaffney. Brownsville Herald, October 6, 2009. Article by Jazmine Ulloa. Coalition for Justice in the Maquiladoras, October 2, 2009. Press release.

A Strange Development in Cross-Border Money Flows

In a strange twist to US-Mexico money flows, new reports of the phenomenon of “reverse remittances” continue to surface. According to the director of a Mexican rural micro-banking system that serves predominantly indigenous communities in southern Mexico, family members of migrants working in the United States are sending money north of the border to keep their loved ones afloat in tough economic times.

Martin Zuvire, director of the Mexican Association of Social Sector Credit Unions (AMUCSS), said in an interview with the Mexican press that migrants’ relatives are sending between $200 and $400 each month to El Norte. Although Zuvire did not offer total amounts, he reported seeing an increased money outflow during the last four months.

The AMUCSS operates in about 550 communities in the states of Oaxaca and Puebla. Rural communities, Zuvire said, confront a double crisis of home-based migrants now finding themselves without jobs in Mexican cities as well as in the United States.

Reports of reverse remittances come at a time when the migrant money flow from the US to Mexico has dropped to its lowest level since 1996. The central Bank of Mexico reported last week that remittances fell 12.88 percent during the first eight months of 2009 compared with the same time period in 2008.

In communities served by the AMUCSS, the recent decrease has been in the order of 30 percent, according to Zuvire. In addition to Oaxaca and Puebla, other states slammed by the remittance crisis include Chiapas, Tabasco and Campeche. All the states constitute newer sending regions in the broader history of Mexico-US migration.

Raul Feliz of the Mexico-based Center for Economic Research and Teaching projected earlier this year that remittances to Mexico would suffer a seven percent drop from 2008’s total, perhaps reaching $23 billion by year’s end. In August 2009 the average remittance in Mexico was $310, an amount down from $343 during the same month in 2008, according to the Bank of Mexico.

Despite the dive, 2009 remittance revenues are expected to nearly rival petroleum exports as a leading source of foreign exchange.

For the first eight months of 2009, oil exports brought in about $15.4 billion to Mexico’s coffers, while remittances accounted for almost $14.7 billion.

Multiple reports have attributed much of the remittance downturn to the collapse of the US construction industry, which was estimated to employ 18 of every 100 Mexicans working in this country prior to the economic crisis.

AMUCSS’ Zuvire said that family savings and possibly loans from relatives are being employed to support migrants in the US.

It’s unclear if money from loan sharks or human traffickers, who charge hefty fees to illegally cross people into the US in the first place, is now being invested to pay routine living expenses until the economy picks up and businesses turn once again to immigrant labor. If migrants and their families are falling further into debt to high-interest lenders, a modern form of indentured servitude could be emerging.

In any event, crossing the Mexico-US border is becoming a costlier endeavor in more ways than one. A joint study by the Civil Liberties Union of San Diego and Imperial Counties and Mexico’s National Human Rights Commission reported last week that about 5,600 migrants have died while trying to cross the border without papers since 1994.

Sources: La Jornada, October 2 and 4, 2009. Articles by Roberto Gonzalez Amador and Susana Gonzalez G. El Universal, October 2, 2009. Article by Jose Manuel Arteaga. American Civil Liberties Union, September 30, 2009. News release.

Will Mexico Recuperate from the Tourism Crash?


Statements made by an official with Mexico’s National Migration Institute (INM) this week confirmed the depth of his country’s tourism crisis. According to Ernesto Rodriguez Chavez, director of the federal agency’s migration studies center, the number of foreign visitors to Mexico registered an 18 percent drop between the months of January and August of this year.

Rodriguez blamed the decline on the world economic crisis and the swine flu scare that peaked during the months of April and May, when the number of tourists fell in half compared with the same time frame in 2008

In 2008 an estimated 22.6 million foreign tourists visited Mexico, according to Amador Campos Aburto, an ex-mayor of Zihuatanejo who served as president of the lower house of the Mexican Congress’ tourism commission during the 2006-09 legislature.

At the peak of this year’s swine flu emergency, resorts popular with foreigners saw hotel occupancy rates plummet to near bottom. Last spring, Cancun experienced occupancy rates of 21.3 percent, while Puerto Vallarta recorded a low number of 29.2 percent. Popular with Mexican national tourists, Acapulco’s hotel occupancy rate nose-dived to 16.7 percent. Scores of cruise ships canceled ports-of-call to Cozumel Island and other destinations.

The INM’s Rodriguez said another significant drop in international tourism could come later this year in the event of a serious flu outbreak.

“If the pandemic behaves at current levels, I’d calculate that it wouldn’t be such an abrupt decrease,” Rodriguez said. “We could face a bigger reduction if this phenomenon acquires bigger dimensions.”

The swine flu crisis resulted in the loss or suspension of 200,000 tourism-related jobs, according to the National Tourism Confederation.

In dollar terms, Mexican Tourism Secretary Rodolfo Elizondo has projected that the tourism drop-off could reduce industry income from more than 13 billion in 2008 to about 10.5 billion for 2009, or approximately the same revenue that was generated in 2004. As an economic activity, tourism accounts for an estimated 2.4 million jobs and 8.2 percent of Mexico’s Gross Domestic Product.

To recover from the crash, some Mexican communities are trying out a variety of enticements. In the small Pacific Coast port of Zihuatanejo, where a dozen restaurants reportedly shuttered their doors for good in recent weeks, some eateries are offering 10-25 percent discounts.

Besieged by an unrelenting wave of narco-violence that’s claimed about 1800 lives this year alone and driven away tourists by the droves, Ciudad Juarez on the Mexico-US border is considering a more drastic solution to bring back the visitors and their dollars.

The city government of Mayor Jose Reyes Ferriz is planning on practically gating-off part of the old Avenida Juarez tourist district and virtually attaching it to neighboring El Paso, Texas. The plan involves using barriers, high-technology and police to erect a security perimeter around a two-block portion of Avenida Juarez below the Paso del Norte (Santa Fe) pedestrian bridge leading from El Paso.

The historic avenue and its surroundings have been the scene of repeated acts of violence during the last two years, including the shooting death of bus driver Alfredo Alberto Martinez Hernandez just yards from the Paso del Norte pedestrian crossing on September 30.

The Reyes administration plan is part of the $20 million Plaza Santa Fe revitalization project of the district immediately near the bridge. It awaits action by the Juarez city council.

Sources: Norte, September 30 and October 1, 2009. Articles by Francisco Lujan and editorial staff. El Universal/Notimex, September 30, 2009. El Sur, August 27 and September 30, 2009. Articles by Noe Aguirre Orozco and editorial staff. El Sol de Mexico, July 26, 2009. Article by Arturo Gomez.

Mexico Credit Bubble Bursts in Street Protest

Mexico’s long-bubbling credit crisis finally burst on the streets this week as protests in two states broke out against financial institutions. In the Chihuahua city of Cuauhtemoc, a group of debtors staged a five-day demonstration outside a branch of the Canadian-owned Scotiabank to demand a restructuring of old mortgages. The protest prompted Scotiabank and other banks in Cuauhtemoc to shutter all branches in the city for fear of additional actions.

Scotiabank is the sixth largest bank in Mexico. Enjoying a presence in nearly 50 countries, Scotiabank reported a net income of $872 million for the second quarter of 2009, an 11 percent decrease over the same period in 2008.

Hector Sada Marquez, president of the industry-run Chihuahua Banking Center, demanded security for local banks. Sada said the Scotiabank debtors would cause major inconveniences by forcing customers to conduct business in other cities.

The bank closures were criticized by two Chihuahua state legislators, Pedro Reaza of the Institutional Revolutionary Party and Victor Quintana of the Party of the Democratic Revolution. Reaza called the shut-downs“insensitive,” while Quintana accused the financial institutions of violating a law that requires banks to follow announced regular hours.

But Guillermo Campos, Chihuahua delegate for the Mexican government’s National Commission for the Protection and Defense of Financial Services Users (Condusef), sided with Scotiabank for not having “guarantees for its operations.”

According to Condusef, home loans in Mexico increased 53 percent from 2000 to April 2009. By mid-year, delinquent mortgages officially accounted for about 3.92 percent of all home loans but were on the rise. In Mexico, current mortgage interest rates range from 12.3 to 15.1 percent annually.

The Cuauhtemoc stand-off ended August 12 after demonstrators withdrew from the Scotiabank premises because of the death of the wife of protest leader Arnulfo Fay Fong.

Cuauhtemoc Mayor German Hernandez Arzaga said he was confident a government-mediated settlement could be reached between Scotiabank and the group led by Fay. A member of the protest group, Sergio Manuel Sandoval, was less optimistic the two sides would strike an immediate accord. Criticizing Scotiabank’s decision to close its doors to the public, Sandoval said demonstrators had no intention of blocking customer access to the branch.

By Thursday, August 13, Cuauhtemoc’s banks had reopened for business. Protests, however, could resume in the coming days if no solution to the conflict is achieved.

In the southern state of Veracruz, meanwhile, another group of debtors burned 50 credit cards in front of a Jalapa branch of Banco Azteca. Alfonso Palomo Bueno, leader of the Dignified Life Foundation that organized the card burning, accused Banco Azteca and other financial institutions of charging “exorbitant” interest rates and harassing debtors. Leveling criticism at the legal system, Palomo contended the courts were being used to threaten debtors with criminal sanctions.“(Courts) have abandoned administering justice to become bank employees,” Palomo charged.

The debtor movement leader said plans were afoot for more protests and the burning of as many as 7,000 credit cards in Veracruz.

Sources: El Diario de Juarez, August 13, 2009. Articles by Alberto Gonzalez and Manuel Quezada Barron. El Universal, August 10, 2009. Article by Romina Roman Pineda. La Jornada, June 19 and 22, 2009; August 8, 12 and 13, 2009. Articles by Victor Cardoso, Ruben Villalpando and Andres T. Morales. Scotiabank.com

Mexican Border Truckers Protest Higher Costs

Higher costs for diesel fuel and toll road fares have some Mexican truckers hopping mad. In the northern border state of Tamaulipas, for example, a spokesman for the trucking industry announced plans to stage a protest during the August 6 visit of President Felipe Calderon to the city of Altamira.

Monthly increases in the price of diesel have brought the majority of 96 businesses belonging to the Conatram transportation association to bankruptcy, said Jesus Lopez Sandoval, Tamaulipas representative for the organization. Currently, diesel goes for a little less than $2.50 per gallon. Private customs brokers and their allies have also prevented smaller, local trucking enterprises from obtaining work, Lopez charged.

Truckers in Baja California also are loudly complaining about a squeeze on their business. A toll road fare increase of approximately 25 cents that went into effect this week will only worsen business conditions, said Rogelio Badillo, president of the Canacar association in Tijuana and Tecate.

“As is customary, the government takes the easy way out by raising fees and taxes,” Badillo added. “Since January, we’ve requested a freeze on the price of diesel, which has not happened.”

Mariem Andrade Trejo, deputy director for the federal Secretariat of Transportation and Communications, justified the 3.8 percent toll road fare hike as a necessary adjustment in price. Discounts for the use of toll roads were implemented back in 2007, and fares remained the same until this month, Andrade said.

Higher energy and transportation costs, meanwhile, could be having a negative impact on Mexican households. According to the Organization for Economic Cooperation and Development (OECD), food inflation in Mexico was registering a 10 percent annual increase by June of this year. Among the 30 member nations of the OECD, only Iceland, which saw an 18.2 percent annual increase in food prices, beat out Mexico.

Sources: Enlineadirecta.info, August 4, 2009. Article by Cynthia Gallardo Guerrero. Frontera, August 4, 2009. El Diario de Juarez, August 4, 2009. El Universal/Notimex, August 4, 2009.

Mexican Credit Card Hole Gets Deeper and Deeper

Although it evades the sensational headlines of the drug war, another crisis is gripping Ciudad Juarez and other Mexican cities. With each passing day, the consumer credit crisis is sucking more and more Mexicans into a deepening financial hole. In the credit card segment alone, at least 13 percent of the 245,000 credit card users in Ciudad Juarez are now delinquent in their payments, according to a Mexican federal government official.

“This is without taking into account the bad debts already sold to private collection agencies and which do not currently enter onto the balance sheets of the banking institutions,” said Jorge del Valle Cosio, Ciudad Juarez director for the National Commission for the Protection and Defense of Financial Services Users (Condusef).

The federal agency promotes negotiations and settlements between credit card-issuing banks and card holders.

In Mexico, delinquent debts are defined as accounts with more than three months of non-payments. Nationwide, bad credit card debts make up at least 10.9 percent of the overall portfolio. Steadily inching upwards toward the record 1999 delinquency rate of 12.7 percent, overdue Mexican credit card debts are now at their highest level in nine years.

For comparison’s sake, delinquent US credit card debts increased from 5.52 percent of the portfolio during the last trimester of  2008 to 6.6 percent in the first trimester of 2009.

In April and May, nearly $60 million in new overdue debts pushed the overall amount of delinquent credit card debt in Mexico to approximately $1.7 billion.

“We are going to see even greater figures of credit card delinquency,” predicted  Pascual O’Dogherty,  chief analyst for the central Bank of Mexico.

O’Dogherty said the overall line of credit used by Mexican card holders increased from 39 percent in December 2007 to 49 percent one year later. The high bank official, however, insisted that the Mexican banking system was still sufficiently capitalized.

Despite the recession and deepening consumer crisis, credit card use has been brisk in some regions of Mexico. For instance, a study by the Aguascalientes Research Center for Business Development reported that use of credit cards in the central Mexican city increased by 40 percent during the first three months of this year.

Banks continue promoting credit card spending, some offering 6 or 12-month interest-free purchases at big, transnational box stores like Wal-Mart and Office Depot.

Credit cards are being touted as a way to reactivate the ailing tourism sector. The summer vacation months of July and August are a tempting time for financially hard-pressed Mexicans to resort to credit cards as the tickets to a long-needed getaway.

Banorte, the only sole remaining large bank in the country owned by Mexicans, pledges it will issue credit cards to applicants with incomes as low as $240 monthly. Boasting it has the lowest Total Annual Cost (CAT) for a credit card in the Mexican market at 25.4 percent, the Monterrey-based Banorte promises “the easiest life for all Mexicans.”

But Mexican customers have made life pleasurable for Banorte. The bank’s parent corporation, Grupo Financiero Banorte, reported profits in the $240 million range for the first six months of 2009. Financial margins were up 16 percent in comparison with the same time period in 2008, and the rate of return was calculated at 15.2 percent. Although credit card income was down, the company’s banking operations were still credited with pulling in up 84 percent of the latest profits.

According to Condusef, the CAT for bank-issued credit cards currently averages 41.78 percent, though some institutions charge as high as 104 percent. Credit card holders getting cash advances from an ATM are assessed fees that range from approximately $3 to $10 for each transaction.

Two big banks, Citigroup’s Banamex and the Spanish-owned BBVA Bancomer, control 57 percent of the Mexican credit card market, according to the National Banking and Securities  Commission.

Like other foreign banks, BBVA Bancomer has discovered its presence in Mexico to be very rewarding. In a project that might be considered the modern equivalent of the erection of the pyramids which once dominated ancient Mexican skylines, BBVA Bancomer plans to build two huge complexes in Mexico City, including a 50-story tower in the heart of the capital city. Scheduled for completion in 2012 at an estimated cost of $900 million, the construction  project counts on local tax breaks.

“Mexico deserves this type of investment and I am convinced it will be one of the great countries of the 21st Century, said BBVA President Francisco Gomez on a recent visit to Mexico City.

Meanwhile, public anger simmers over the high cost of credit cards and the growing consumer debt crisis. Representing 10 Mexican states, activists connected to the El Barzon debtor advocacy organization gathered in Mexico City this month to plan the launching  of a new consumers’ campaign set for September 23 of this year.

Sources: El Diario de Juarez, July 22 and 23, 2009. Articles by Gabriel Simental and Jessika Becerra/Agencia Reforma. El Universal, July 10, 14 and 20, 2009. Articles by Romina Roman Pineda. Aguas, July 12, 2009. Article by Marcela Gonzalez. Tribuna de la Bahia/Agencia Reforma, July 7, 2009. Articles by Jessika Becerra. La Jornada, June 22, 2009; July 5, 7, 16, 2009. Articles by Victor Cardoso, Bertha Teresa Ramirez, Juan Antonio Zuniga, Juan Carlos Miranda,  editorial staff, and the Reuters news Agency.

International Unions Escalate Mexico Solidarity

International labor activists and their supporters are ramping up pressure on the Mexican government to resolve several outstanding disputes. On a five-day visit to Mexico this week, a delegation of several dozen labor leaders representing millions of workers from the US, Canada, Europe, South Africa, Australia, and South America renewed their backing of Mexican colleagues locked in conflicts with the federal government and the big transnational corporation Grupo Mexico.

The immediate issues at stake include settling a two-year old strike at Grupo Mexico’s Cananea copper mine near the Sonora-Arizona border, guaranteeing the recovery of the remains of miners killed in the February 2006 Pasta de Conchas coal mine disaster in Coahuila state, freeing imprisoned labor leaders, and allowing Mexican mine workers’ union leader Napoleon Gomez Urrutia to return unmolested from Canadian exile. Among other demands, the international movement is seeking a meeting with Mexican President Felipe Calderon to discuss its issues of concern.

Labor attorney Marco Antonio del Toro said the visit showed the vibrancy of international support for Mexican labor causes, adding that Mexico could not continue billing itself as a democratic nation as long as“unjust jailings and alliances between businessmen and government” continued.

Representatives of the United Steelworkers, International Metal Workers Federation and the International Federation of Chemical, Energy, Mine and General Workers Unions helped form the group that traveled to Mexico. The labor delegation arrived to celebrate the 75th anniversary of the founding of Mexico’s mine and metallurgical workers’ union, which falls on July 11. This year’s celebratory event was scheduled for the port town of Lazaro Cardenas, Michoacan.

Also a member of the delegation, Canadian parliamentarian and New Democratic Party leader Jack Layton met with Mexican Labor Secretary Javier Lozano.

“We made it clear that the government’s interference in union governance, its jailing of union leaders and freezing of union bank accounts, declaring strikes illegal and failing to prosecute the killers of union leaders are serious and unacceptable violations of basic human rights,” Layton said in a statement after the meeting.

According to one Mexican press account, Lozano assured Layton that Mexico’s federal government, which ordered Napoleon Gomez removed from the union leadership and pursued legal actions against the veteran labor leader for alleged embezzlement of union funds, based its actions in strict accordance with Mexican law.

While in Mexico City, Layton and Australian Labor Party parliamentarian Graham Perret also met with Mayor Marcelo Ebrard, who is increasingly mentioned as a possible 2012 presidential candidate.

Anti-Gomez union members used the occasion of the 75th union anniversary and  international visit to stage a demonstration outside a press conference and run a large media ad .

In the ad, a group of 13 union leaders from Chihuahua, Sonora, Zacatecas, Coahuila, and Durango slammed Gomez for using the union to his own benefit. Calling for the renovation of the organization, the statement accused Gomez’s leadership of bringing workers to the point of internal “confrontation.”  Pro-Gomez union forces have charged that dissidents are manipulated by Grupo Mexico and anti-labor elements of the federal government.

Accompanying the foreign visitors, Mexican senator and longtime human rights  activist Rosario Ibarra charged that almost 100 oil industry workers have disappeared” since the advent of the Calderon presidency in 2006, because of labor disputes.

Although the high-level international labor leaders’ tour marked a significant escalation of foreign support for burning labor issues in Mexico, the visit generally received scant attention in the country’s press, especially in the electronic broadcast media.

Sources: La Jornada, July 9, 10, 11, 2009. Articles by Patricia Munoz Rios and Carolina Gomez Mena. International Federation of Chemical, Energy, Mine and General Workers Unions, July 8 and 10, 2009. Press releases.

Another Tale from Chilelandia

Economic globalization and trade liberalization have wrought profound changes in New Mexico’s chile pepper industry. Competition from imported Mexican, Chinese and other chiles contributed greatly to the reduction of harvested chile acreage in the Land of Enchantment from about 34,500 acres in 1992 to slightly more than 11,000 in 2008.

While the downturn in chile production was most evident in the jalapeno and cayenne segments of the industry, foreign imports are also touching the emblematic New Mexican green chile. Like seeing a snowstorm in August, residents of Albuquerque can now behold freshly roasted green chile from outside the state in May-two full months ahead of the New Mexican harvest.

The same economic processes shaping the future of the New Mexican chile industry are jarring the homeland of the original source of chile grown in New Mexico-Mexico.

In San Marcos Texmulucan, a municipality located in the state of Puebla south of Mexico City, competition from China-grown “poblano” chiles is taking a toll on local producers, according to a farm industry representative Sixto Palmares Vargas, spokesman for local chile growers, told a Mexican reporter that cheap Chinese chile imports have forced farmers to slash production of poblano chiles from 1,350 tons in 2001 to about 1,000 tons in 2009. In addition to harvesting fresh, plump poblanos, farmers in San Marcos Texmulucan produce dry forms of the pepper.

“Middle men mix poblano chile from Zacatecas with the Asian variety and a little bit of the (Puebla) criollo variety so they can sell it at half the cost of a kilo of poblano chile,” Palmares said.

A cultural icon of Puebla, poblano chiles are used to make the famous chiles en nogadas that are draped with pomegranates and other flavorings. The dish is a late-summer tradition in the Mexican state.

But Palmares said a lack of technological sophistication, resulting in annual yields of 6-8 tons per hectare, place Puebla farmers at a disadvantage in a globalized market.

Still, not all the news is bad from the Puebla pepper front, according to the grower representative. Palmares said farmers recently signed an agreement with the state branch of Canirac, a restaurant and food trade industry association, to supply 50 tons of poblano chiles every year for the preparation of chiles en nogadas. The deal netted farmers a preferential price of 13 pesos, or about one dollar, for each kilo of chile, as opposed to the going rate of 6-8 pesos per kilo.

Promoting local consumption is an important goal of farmers, Palmares said. In this spirit, he added, a poblano chile fair will be held August 29-30 in San Rafael Tlanalapan, Puebla.

Additional source: La Jornada, June 18, 2009. Article by Tania Damian Jimenez.

Digital D-Day on the Border

A historic June snowstorm hit homes in Mexican border cities today. As the United States went from analog to digital television transmissions, many Mexican viewers who’ve long watched broadcasts from just across the border lost access to their favorite programs. In Ciudad Juarez, for example, viewers with analog-only television sets are no longer able to view the El

On June 11, Univision transmitted its last evening news broadcast in analog for millions of viewers in the US and Latin America. Besides regular coverage of the soccer world and other familiar topics, the Spanish-language news program carried a story about the bloody confrontation between indigenous Peruvians and the government of President Alan Garcia over plans for massive resource exploitation in the Amazon Basin, a region of the world many scientists consider of critical
importance for slowing down or preventing global climate change.

Residents of Ciudad Juarez and other Mexican border cities who do not purchase digital converter boxes or sign up with cable/satellite providers will find themselves cut off from learning about not only international events but local and regional ones as well. For better or worse, the El Paso news programs cover issues that impact both El Paso and Ciudad Juarez residents, as well as report on events in nearby Las Cruces and southern New Mexico.

But analog is not quite dead on the border. Two local stations, affiliates of the Multimedios and Telemundo networks, have low-power licenses and will be able to broadcast analog signals for two more years. The two stations could benefit from advertising dollars that migrate to the remnants of analog. Ciudad Juarez is an indispensable market for El Paso businesses which, to one degree or another, are dependent on Mexican customers.

“We will continue supplying programming not only to El Paso but also to Ciudad Juarez,” vowed Lorena Castaneda, general manager of Telemundo’s Channel 48 in El Paso. “It will only be for these two communities,” Castaneda added, “because Las Cruces cannot receive our analog signal.” The television station manager said the digital shift gave her business an“unexpected,” possible benefit.

In Mexico, meanwhile, the digital transition in television is not expected to be finished until 2021. It’s almost certain many now-obsolete US television sets will get a second lease on life south of the border.

Sources: Univision, June 11, 2009. El Diario de El Paso, June 10 and 12, 2009. Articles by Pedro Chaparro and Julio Antonio Molinet. El Diario de Juarez, June 6 and 11, 2009. Articles by Juan de Dios Olivas and editorial staff.

Checkpoints Slow Travel, Trade

Highway checkpoints operated by the Mexican government have caused serious delays in travel and commerce in at least two border states in recent days. Julio Cesar Corona Valenzuela, director of the AOANS farm industry group in Sonora, charged that an army-run checkpoint set up to detect illegal drugs and weapons on the Mexico-Nogales highway is causing agricultural producers to lose tens of millions of dollars in products headed to the US export market.

According to Corona, trucks back up for miles at the Benjamin Hill checkpoint located about 90 miles from the Sonora state capital of Hermosillo. The delays result in the spoiling or degrading of produce, Corona said.

“Losses of 70 million dollars were calculated last year just for the horticultural sector,” said Corona, adding that the maquiladora, livestock and fish industries were suffering similar losses. The ag industry representative questioned why the federal government has built but not opened a new checkpoint that is equipped with state-of-the art inspection technology and situated about two miles from the existing Benjamin Hill site.

According to Corona, the Mexico-Nogales highway is an important route for farm export commodities produced in the states of Sinaloa, Nayarit and Colima, among others. In addition to producing fruits and vegetables, Sinaloa and Nayarit are especially known for their marijuana and opium poppy crops.

On the other side of the border region, meanwhile, serious delays in crossing into Reynosa, Tamaulipas, were reported last week as the Mexican government began checking trucks and passenger vehicles entering Mexico from the area near McAllen, Texas.

The new customs routine underway at three international bridges uses advanced technology to inspect all commercial trucks and 10 percent of passenger vehicles. Mexican federal officials have become increasingly vocal about weapons and illegally-generated cash coming into their country from the United States. Kinks in the new Reynosa inspection regime, however, were blamed for two-hour traffic snarls endured by travelers attempting to enter Mexico during the Holy Week-Easter holidays.

Sources: La Jornada, April 12, 2009. Article by Ulises Gutierrez Ruelas. El Sur/Agencia Proceso, April 10, 2009. Article by Gabriela Hernandez.

The Political Economy of Holy Week

Holy Week in Mexico is more than an annual celebration embracing cultural ritual, religious fervor and family reunion. The holiday season is an important one for tourism-oriented communities, perhaps never more so than in recession-wracked 2009. Tourism planners estimate about 16 million people (including more than two million foreigners) will hit the country’s highways and airways this week.

In Baja California, tourism officials hope to lure 200,000 tourists and 19 million extra dollars to resorts including Rosarito, Ensenada and San Felipe. Considering that 180,000 tourists visited the northern Mexican state during Holy Week last year, the goal is an ambitious one in a time of economic crisis.

Ives Lelevier Ramos, undersecretary of state tourism, said the state government is implementing special security operations and promoting retail discounts in an effort to draw more in-state tourists. According to Lelevier, discount cards offering 10-50 percent savings at selected establishments are available at state tourism offices to anyone who presents proof of residency in Baja California.

In Los Cabos at the southern end of the Baja Peninsula, tourist industry representatives reported a decent 65 percent hotel occupancy rate for the kick-off of Holy Week, a percentage 10 points higher than in 2008. Still, visitors are watching their wallets this year. “Tourists used to spend $80 a day, now they’re spending $60,” said Miroslava Bautista, the director of the municipal tourism department.

Nationwide, other Mexican tourism officials expect the number of Holy Week tourists to fall from 16.4 million in 2008 to 16 million in 2009. Revenues are also expected to slide below the $2.7 billion earned in 2008.

In past years, Mexican migrants, or “Paisanos,” residing in the United States have been an important part of the Holy Week tourist stream. Initial reports suggest the number of returning migrants is way down this year. For instance, the number of daily airport passengers in Tijuana fell from between 12-13,000 travelers during the first three days of Holy Week in 2008 to approximately 11,500 in the same period this year, according to airport officials.

In Ciudad Juarez, Chihuahua, the number of migrants passing through the city to points south plunged 53.3 percent in comparison with last year. Immigration authorities issued only 2,640 permits during the first few days of Holy Week, said Demetrio Sotomayor Cuellar, Ciudad Juarez representative for the Chihuahua state tourism department. Sotomayor said the reduced number of migrant travelers means more than two million dollars less for his economically-challenged city.

In addition to the narco-violence that’s ravaged Ciudad Juarez and the state of Chihuahua in recent months, its likely tighter border controls are discouraging undocumented residents of the US who used to pass back and forth across the border. Sotomayor, however, pointed the finger at the international economic crisis.

“And that’s why people are not traveling,” he insisted.Police graft and abuse could be other issues discouraging some travelers. Earlier this week, the administrator of the Mexican port of entry at Santa Teresa on the Chihuahua-New Mexico border confirmed that officials will investigate two complaints against personnel assigned to the post, including one from an unidentified New Mexico woman who claimed she was shaken down for $200 by a Mexican federal police officer.

The elusive “Paisano” is bad news for highway towns like Villa Ahumada, a rural crossroads located south of Ciudad Juarez. Sometimes called the “Burrito Capital” of Mexico because of the prevalence of restaurants and food vending stands, Villa Ahumada’s economy depends on visitor traffic, which has been negatively impacted this year due to episodes of narco-violence in the small town.

Outside the border region, popular beach destinations hope this week will compensate for a disappointing spring break, a key tourist season between the Christmas-New Year’s holidays and Holy Week.

Jose Salgado Nava, president of the Acapulco Hotel and Tourism Enterprise Association, said the number of rowdy, primarily US “spring-breakers” visiting Acapulco fell from 22,000 in 2008 to 19,000 in 2009. According to Salgado, Cancun, Puerto Vallarta and Mazatlan also witnessed spring-breaker drop-offs in the 20 percent range.

Reports in the possession of the tourism commission of the lower house of the Mexican Congress project a 90 percent hotel occupancy rate at the country’s main resorts this week. Typically, the three days preceding Easter Sunday register the biggest visitation rate.

Congressman Octavio Martinez Vargas, commission president, said 60 percent of Mexican and foreign tourists will pay for their trips with credit cards-current high interest rates notwithstanding.

“We are seeing a phenomenon that happens in December, when the people want to fulfill their plans for Christmas and New Year’s,” Martinez said. “Just like on Three King’s Day, these are times when the populace wants to happily pass time with their families, regardless of the problems they will feel in the following weeks.”

In Ciudad Juarez, meanwhile, local officials are looking beyond Holy Week to recapture the tourism that all but evaporated because of the bloody narco war on the border city’s streets.

Relatively lessened levels of violence since the end of February, as well as the recent pick-up of business at bars and restaurants are positive signs toward recovery, said Chihuahua state tourism official Sotomayor. To attract tourists, Mexican government agencies to invest more than three million dollars in a publicity campaign that could include billboards along Interstate 10 that passes through El Paso.

“We have a bad image internationally and we are going to try to counter this with hard facts such as the downturn of criminal acts that we have seen in our city and our state,” Sotomayor added.

In Mexico, tourism is the third largest source of legal foreign exchange after oil exports and migrant remittances. According to the Mexican Chamber of Deputies’ tourism commission, the industry accounts for eight percent of the nation’s Gross Domestic Product and employs 2.2 million people.

Sources: El Sur, April 7, 2009. Article by Xavier Rosado. El Diario de Juarez, April 5 and 7, 2009. Articles by Horacio Carrasco and editorial staff. apolaka.com, April 6, 2009. Frontera, April 6, 2009. El Universal, April 6 and 8, 2009. Articles by Julieta Martinez and correspondents. La Jornada/Notimex, April 5, 2009.

The Mounting Cost of Brain Drain

The continued migration of professionals as well as the lack of investment in scientific research and technological innovation is bearing a high cost for Mexico. An estimated 575,000 Mexican professionals currently reside outside the country of their birth, according to Rodolfo Tuiran, federal assistant secretary of higher education. Of nearly 600,000 Mexican professionals abroad, 552,000 live in the United States while 23,000 reside in Europe, the federal education official said at a Mexico City seminar on migration and the professional class.

Every year, an estimated 20,000 Mexican professionals leave home to search for opportunities in other lands. The exodus has grown from an average of 15,000 professionals who left Mexico each year between 1995 and 2000.

Quoted in the Mexican press, Tuiran’s numbers do not include professionals living in Canada, a country which is increasingly attractive for Mexican migrants.

The basic, up-front cost of the brain drain to Mexico is an estimated $7 billion just in terms of educational outlays that were spent in training the present number of professional emigrants, according to Tuiran’s calculations.

Tuiran’s sum, however, does not include costs associated with the loss of technological know-how and value-added economic potential. For example, in the state of Michoacan, home of the important Pacific port of Lazaro Cardenas, the low quality of products results in the loss of approximately $160 million annually to the state, according to an estimate given at a recent round-table discussion in Michoacan attended by members of the academic, business and public sectors.

Pedro Mata Vazquez, president of the Michoacan State Council of Science and Technology said Mexico has invested between 0.37 and 0.46 percent of its Gross National Product (GNP) annually in scientific research and technological development in recent years.

The percentage of GNP invested in future technical capabilities falls below the average 0.54 percent of GNP invested by other Latin American countries and the one percent of GNP recommended by international organizations. Forty percent of Mexican products “have a low technological content and a low price because they are not value-added,” Mata said. Another consequence of the talent loss and technology gap is Mexico’s dependence on foreign imports, Mara added.

Gathered at the Metropolitan Autonomous University in Mexico City (UAM) for a recent seminar on the brain drain, academic researchers and others considered the reasons behind a professional exodus that is hindering Mexico’s economic development.

Low salaries, university job shortages, inadequate retirement programs, underdeveloped research infrastructures, and the lack of reintegration programs for students studying abroad were identified as factors favoring even a greater brain drain.

Angel Diaz Barriga, an educational specialist for the National Autonomous University of Mexico, said Mexican students abroad have little incentive to return home after completing their studies. Unless Mexico improves professional salaries, Diaz warned, the country will “mortgage its future” and not foster a “new generation that replaces the current batch of researchers.”

An estimated 25,000 Mexican students are presently pursuing studies in foreign private and public universities. However, grants from the official National Council for Science and Technology and other organizations pay for the educations of only 3,000 students abroad.

Magdalena Fresan, rector of UAM’s Cuajimalpa campus, said a bigger research crisis within Mexican universities could emerge within the next decade if push and pull migration issues were not adequately addressed. Mexican university researchers currently average 55 years of age, Fresan said.

In the international scheme of things, the brain drain in Mexico and other developing nations could contribute to even more extreme differences between countries and regions, said Carmen Garcia Guadilla of the United Nations Educational, Scientific and Cultural Organization.

Sources: La Jornada (Michoacan), March 4, 2009. Article by Erick Alba. La Jornada (National Edition), March 3 and 4, 2009. Articles by Karina Aviles, Emir Olivares and Laura Poy.

Green Beans, Child Labor and NAFTA

Two tragic accidents highlight the human toll of child labor in northern Mexico’s agricultural export industry. Last Saturday, February 7, a 20-month-old child, Ismael de los Santos Barrea, was reported crushed to death by truck tires at a farm in Sinaloa where his parents, teenage migrant laborers from the state of Guerrero, were working to support the family.Reportedly, no daycare was available for the boy.

A representative of the Tlachinollan Human Rights Center of the Mountain, a non-governmental organization headquartered in Tlapa, Guerrero, said the unfortunate child’s grandfather contacted the advocacy organization to complain of the tragedy.

Margarita Nemecio Nemesio, Tlachinollan migrant coordinator, said legal representatives for Agricola Reyes, the farm enterprise where de los Santos Barrea child died, convinced the child’s parents to bury their son in Sinaloa in order to avoid paying costs associated with transporting the body to the family’s Guerrero homeland.

“The argument of the boss was that they would come up with an agreement later since the boy wasn’t a worker for the company,” Nemecio said.

The death of Ismael de los Santos Barrea followed an accident last month near Culiacan, Sinaloa, in which 10-year-old Angela Barraza Lopez lost left her arm to a machine while cleaning green beans. Barraza was earning about $5 per day without benefits when the accident occurred.

“I let her work with her friends, all of them her age, because they paid well and it helped me with the household expenses,” said Barraza’s mother Rosario. Similar to the de los Santos Barrea episode, Barraza’s mother complained of initial difficulties in getting just compensation for death or injuries.

Child labor is still common in the fields of Sinaloa and other northern states where thousands of indigenous migrants and their children from the states of Chiapas, Oaxaca, Guerrero, Veracruz, and Mexico make an annual trek to perform stoop labor and other hard physical chores.

According to the Guerrero-based Council of Agricultural Laborers of the Mountain, 8,177 migrants from the indigenous region of the state from which the de los Santos family hails traveled to northern Mexico to work during the 2008-09 winter harvest. The group additionally reported that 519 infants aged one year or less were brought along on the migration.

Nationwide, Mexico’s National Institute of Statistics, Geography and Informatics reported that 3.6 million of 29.2 million Mexican children aged 5-17 were engaged in some kind of economic activity in 2007. In Guerrero, 20 percent of the age group studied by the federal census agency was categorized as being in the labor force.

In the north, the states of Sinaloa, Sonora, Chihuahua and Baja California function as a vast, transnational farming belt that provides food and fiber for the urbanized societies of the United States and Mexico. Cucumber, tomato, green beans and chile peppers are popularly-cultivated crops, among others. According to the Confederation of Agricultural Associations of Sinaloa, state vegetable exports to the United States raked in $572 million in 2007. From Sinaloa, 316,828 tons of tomatoes were sent to the US during the same year.

Guerrero’s Tchallinolan Human Rights Center has documented five other cases of children killed or injured in the fields of Sinaloa, Sonora and Chihuahua in recent years. However, spokeswoman Margarita Nemecio said more cases might not be officially registered.

“We believe the number could be higher,” Nemecio said, “because many times the owners harass the parents of minors to not get the authorities involved.”

Mexico, meanwhile, is also a magnet for children laborers from other nations. Since the beginning of the year, federal authorities have discovered three groups of Guatemalan minors contracted to work as street vendors or domestic workers in the southern state of Chiapas. On February 12, police assigned to the federal unit that investigates crimes of violence against women and human trafficking picked up 11 Guatemalan children aged 7 to 17 who were selling candy and balloons on the streets of Tapachula, Chiapas. Allegedly, the children were being paid with water, cookies and a tarp to sleep with on the ground.

Sources: El Sur, February 11, 2009. Article by Zacarias Cervantes. La Jornada, January 29 and February 14, 2009. Articles by Javier Valdez Cardenas, G. Castillo and A. Mariscal.

Mexico Bails Out Detroit

In an effort to soften the impacts of the auto industry crisis, Mexican officials are offering financial assistance to foreign-owned companies with plants in Mexico. In the northern border state of Coahuila, for instance, the administration of Governor Humberto Moreira has announced it will give $1.5 million to General Motors in a bid to stave off more lay-offs. The aid package, which is meant to cover worker salaries, was unveiled after General Motors dismissed 600 workers at its Ramon Arizpe industrial complex in Coahuila last week.

Closely tied to the US export market, the Mexican automobile industry has been in serious trouble since last year. Across the nation, Mexican factories are dismissing assembly-line personnel, reducing work hours and instituting temporary shut-downs of production. Adding to the crisis is a sharp drop in domestic auto sales, which some industry spokesmen and financial analysts blame on the large number of used vehicles imported from the United States as well as the credit crunch squeezing Mexican consumers.

In January, sales of new autos in Mexico fell 20 percent in comparison with the same month in 2008.

“Many buyers are postponing their decision to buy,” said Jose Gomez Baez, president of the Mexican Automobile Distributors Association.

Gomez said Mexico’s federal government is injecting hundreds of millions of dollars into the credit market to help boost new auto sales in the country.

The auto industry could also benefit from a new program announced by Mexico’s Economy Ministry that creates a subsidy pool of about $150 million for export-oriented manufacturers unable to maintain previous production levels.

Additionally, industry leaders propose other measures. Tax incentives for the purchase of new cars and trucks as well as a federally-subsidized trade-in program for older, more contaminating vehicles are among popular proposals under consideration. Similar to the SUV deduction implemented in the United States some years ago, a proposal to allow a 100 percent tax deduction for the purchase of certain classes of new vehicles is gaining traction in Mexico.

Border state Governor Moreira, who has been mentioned as a possible aspirant for the presidential nomination of the opposition Institutional Revolutionary Party in 2012, joined the chorus of industry and government voices this week calling for the expansion of auto industry rescue programs.

Sources: CNN en Espanol, February 7, 2009. La Jornada, February 6, 2009. Article by Leopoldo Ramos. El Diario de Juarez, February 5, 2009. Norte,
January 31, 2009. Article by Antonio Rebolledo.

Violence, Insecurity Add to Tourism Woes

Organized criminal violence and other forms of public insecurity are being blamed by a Mexican hospitality industry executive for a sharp drop in tourism in at least 7 cities during 2008. According to Rafael Armendariz, president of the Mexican Association of Hotels and Motels, the national Secretariat of Tourism (Sectur) blamed narco-violence and other criminal activity for a ten percent average drop in tourism in the cities studied. The cities included Tijuana, Ensenada, Ciudad Juarez, Ixtapa-Zihuatanejo, Morelia, Culiacan, and Nuevo Laredo.

Three northern Mexican cities-Tijuana, Ensenada and Ciudad Juarez-registered the largest drop in tourism, from 13-21 percent, according to Armendariz’s information. Both Morelia and Ixtapa-Zihuatanejo, meanwhile, registered an average 8 percent drop in tourism. The combined downturn resulted in the loss of an estimated 580,000 tourists to the 7 cities. No precise economic impact was reported, but potential monetary losses could be in the hundreds of millions of dollars.

Maria Gloria Ocampo, Guerrero state delegate for the National Migration Institute, earlier reported a sharp, overall reduction in the turnout of foreigners who visited Ixtapa-Zihuatanejo and Acapulco in 2008. According to Ocampo, the number of foreign visitors processed through airports in the two resorts plunged 19.3 percent last year in comparison to 2007, from 746,000 tourists in 2007 to 602,053 last year. Cruise ship tourists disembarking in Guerrero were also far fewer in 2008, down from 504,648 people in 2007 to 398,360 in 2008.

High-profile violence disturbed the peace of many Mexican border and interior cities last year. In Morelia, Michoacan, eight people were killed and scores injured when grenades were tossed into a large crowd celebrating Mexican Independence Day.

With more than 1,600 murders in 2008, Ciudad Juarez alone accounted for a huge chunk of the 5,585 murders nationwide the National Human Rights Commission tied to narco-violence last year.

Press accounts report at least 84 banks were robbed and 5,000 businesses forced to shut their doors in the border city in 2008. At least 3,000 families reportedly fled Ciudad Juarez, while 112 police officers-the frequent assassination target of criminal organizations-abandoned the force.

The negative tourism numbers are bad news for an industry that employs an estimated 2.3 million Mexicans. What’s more, they add bad brew to the kettle of a rancid economic stew that stirred this week.

New reports revealed that Mexico’s official unemployment rate (widely considered to be an underestimate) reached 4.3 percent in 2008- the highest figure in eight years. For their part, oil exports fell 16.8 percent to an average 2,799,000 barrels produced per day in 2008. While Mexico’s revenue from oil exports reached a record $43 billion in 2008, the bonanza was short-lived. Mexican earnings were based on last year’s record oil prices and an average price of $84.35 per barrel. By the third week of January 2009, Mexican oil fetched $37.21 for each barrel sold.

Sources: EFE, January 21, 2009. La Jornada/Notimex/Reuters, January 21, 2009. Proceso, January 18, 2009. Article by M.Turati. El Sur, January 2, 2009. Article by Javier Rosado.

Border Businesses Thrive amid Recession, Violence

For some businesses on this side of the US-Mexico border, not all is doom and gloom. Offering a 2 for 1 deal like a Happy Hour special, a Nissan dealership in Laredo, Texas, is doing a brisk business with Mexican customers. With the purchase of an Armada SUV from Paul Young`s Family Nissan of Laredo, buyers are given an Altima car to take home for three years.

Company salesman Jaime Aguilar said Armada sales have jumped three or four hundred percent in recent months. Of 67 Armadas sold, Aguilar said, about half were purchased by Mexican nationals, including residents of Queretaro, Monterrey and Nuevo Laredo. Mexican comedian Carlos Villagran even snatched up one of the specials, the salesman said.

“No down payment is (always) required,” Aguilar affirmed, adding many Mexican customers obtain bank loans.

The Laredo Nissan dealership’s new bonanza constrasts with the luck of counterparts across the border. In Mexico, new auto sales dipped 6.8 percent in 2008.

Under the North American Free Trade Agreement (NAFTA), Mexican citizens are allowed to import new automobiles and trucks tariff-free as long as they obtain a certificate of origin that shows their new vehicle was manufactured in one of the three NAFTA member nations. Mexican citizens still must pay a 15 percent value-added tax in addition to registration and import fees on new vehicles.

Hundreds of miles to the north, in El Paso, Texas, another business sector that is witnessing bust elsewhere in the US is exhibiting suprising vibrancy. El Paso real estate agents report a healthy market due in good measure to the presence of home and property buyers from Ciudad Juarez, many of whom are presumably fleeing the violence that claimed more than 1,600 lives in their city in 2008.

Although no precise numbers are immediately available on the percentage of new homebuyers who hail from El Paso’s sister city, some agents report showing more and more homes to interested Juarenses.

El Paso business leaders say other infusions of new cash from Ciudad Juarez are circulating in the local economy. For instance, real estate broker Juan Uribe said investors from Ciudad Juarez recently financed the construction of five shopping centers in the Texas border city. According to the El Paso Hispanic Chamber of Commerce, a dozen new Mexican-owned businesses have opened their doors on US soil.

Like El Paso, different migration and capital flight trends emerged around San Diego and Laredo during the last four or five years, as a still-undetermined number of well-off Mexicans fled narco-fanned violence in Tijuana and Nuevo Laredo.

Sources: Agencia Reforma, January 12 and 13, 2009. Articles by Martha Cazares and Sara Cantera. Dallas Morning News, January 12, 2009. Article by Alfredo Corchado and Monica Ortiz Uribe. WorldNow and KVIA (El Paso), January 10, 2009. Article by Angela Kocherga.

Workers Not Thrilled on Blueberry Hill

As the 2008 holiday season unfolds and Christmas stockings begin filling, a group of laid-off workers at a US-owned Mexican border plant is battling management over the issue of severance compensation. Former employees of the Blueberry Hill Foods candy factory in Ciudad Juarez, Chihuahua, have filed more than 80 complaints with Mexico’s Labor Conciliation and Arbitration Board accusing the company of not offering sufficient severance payments.

Joaquin Alberto Barrios Cervantes, Ciudad Juarez director of the local labor board, said that a “considerable number” of workers have filed legal actions designed to secure “possible benefits” entitled them under Mexican law.

As a precautionary measure, attorneys for the workers also seek to embargo plant equipment so owners don’t completely shut down the plant without first duly compensating employees.

“They want to give me 50,000 pesos (about $3,850) when I should get more than triple what they offer me,” said Abel Flores Aguilar, a former maintenance supervisor with 14 years of service at the export plant, or maquiladora. “I have spent my life here. It is not fair.”

Other longtime employees echoed Flores’ complaint. In contrast to the Ciudad Juarez workers whose severance payment offers reportedly range from 27,000 to 50,000 pesos per employee, laid-off employees of the Republic Windows and Door Plant in Chicago, Illinois, who recently occupied the factory grounds, won an agreement negotiated with their employer and Bank of America for an average severance payment of about $7,000 per worker plus extended health insurance coverage.

To press their demands, more than 100 laid-off Blueberry Hill Foods workers staged a December 12 demonstration outside the factory, which is located in the Fernandez Industrial Park.

Former workers have also charged that unsafe conditions at the plant resulted in workers losing arms and fingers or suffering other serious physical problems. According to dismissed workers, the plant has given pink slips to more than 700 of 1,600 employees since last August. Former production supervisor Victor Barraza said about 100 employees were let go without any compensation after drug tests returned positive.

Cited in a local press story, unnamed Blueberry Hill Foods staff said the lay-offs were part of the company’s plan to survive the recession. However, the unnamed sources did not comment on workers’ allegations. Sandra Montijo Dubrule, president of the local Maquiladora Association, confirmed Blueberry Hill Foods is a member of her group but did not volunteer information about the employers’ possible responses to workers’ demands.

Labor attorney Jose Luis Richardo, who represents ex-workers, charged that the company is offering reduced severance payments in an attempt to avoid its legal obligations, while telling laid-off employees it will begin contracting for new work “next January.”

Counting more than two decades in Ciudad Juarez, Blueberry Hill Foods has undergone ownership changes since 2007. Like other global industries, the international candy business has been the scene of intense competition and corporate buy-outs in recent years.

By 2005, the Blueberry Hill Foods facility in Ciudad Juarez had the capability of rolling out more than 1.3 million pounds of sweets every day. Blueberry Hill Foods specializes in producing bulk candies for clients including Wal-Mart, Sam’s Club, Target, Walgreens, Safeway, and 7-11. The candy manufacturer makes gummi bears, jelly beans and other sugary products popular with US children and other candy lovers.

Sources: Frontenet.com, December 14, 2008. Article by Sergio Valdez. Norte, December 13, 2008. Article by Arturo Chacon. El Diario de Juarez, December 13, 2008. Article by Gabriel Simental. Lapolaka.com, December 12, 2008. Commondreams.org/Nation, December 12, 2008. Article by John Nichols. Allbusiness.com, July 1, 2007. Bhfoods.com, May 21, 2007. Bizjournals.com/dallas, May 13, 2005. Article by Margaret Allen.

Mexican Tourism Fears Another Big Pinch

As the winter tourist high season fast approaches, the ailing Mexican tourism industry is nervously hedging its bets in a year of international economic crisis. Mexican Congressman Octavio Martinez Vargas, president of the tourism commission of the Chamber of Deputies, recently warned that the global economic crash could result in a 10-20 percent reduction in the number of international visitors who hit Mexican shores this season.

If Martinez’s numbers prove accurate, they mean more bad news for a country that depends on tourism for eight percent of its Gross National Product and provides jobs to 2.3 million people, not including the huge informal sector that’s developed in tourist communities.

In addition to a hostile financial landscape, Martinez said Mexico has a public relations problem in countries like Great Britain and Germany (not to mention the US), where news of violence connected to organized crime has touched off official alerts to potential travelers.

In separate comments, Mexican Tourism Secretary Rodolfo Elizondo Torres conceded that criminal violence has had some negative effect on the tourist industry. Still, Elizondo appealed to the media to not sensationalize the problem.

“I don’t watch television, I am not interested in seeing how many dead there are like it was some kind of soccer score,” Elizondo quipped.. “This is not about concealing the truth, just about not repeating it every day. What is gained by showing photos of headless people in the newspapers.?”

Elizondo and other tourism industry promoters are banking on Mexico’s own national tourists to come to the rescue this high season. In recent years, national tourism kept many local economies alive and kicking as low-cost airlines, easy consumer credit and generous end-of-the-year bonuses for better-off workers made vacation getaways possible for many people.

In 2008, however, several discount airlines went belly up, victims of the fuel price crisis, and more than 200,000 Mexicans lost their jobs. Once freely-available credit cards became scarcer and scarcer, and the rate of bad credit card debt soared 50 percent from December 2007 to October 2008, reaching about three billion dollars.

Yet another factor putting a damper on tourism involves US immigration and border security policies. Once upon a time not too long ago, many undocumented Mexicans residing in the United States took long winter breaks. Returning to their home communities, migrants spent dollars for weeks on end. Nowadays, many are reluctant to risk a holiday trip and then attempt to reenter the US and its better fortified southern border.

Finally, Mexico confronts renewed competition for the international tourists still with cash to burn. Cancun, for example, is reportedly losing some tourists to Caribbean countries, which are getting better organized at fishing for trophy international travelers. At a meeting in Cuba in recent days, the Caricom group of Caribbean nations discussed ways of keeping the big foreign tourist fish swimming within its own waters during trying economic times.

Sources: El Sur, December 9, 2008. Article by Xavier Rosado. Univision, December 6, 2008. El Universal, December 5, 2008. Article by Juan Arvizu and Andrea Merlos. La Jornada, November 28, 2008; December 4, 2008. Articles by Roberto Gonzalez Amador and Mauricio Conde Olivares.

Defying Deflation and other Economic “Laws”

US economists have begun to warn about deflation, or the possibility that prices will fall so low that profits evaporate in the mist as sellers are left with no margins to make any money. But in Ciudad Juarez, Mexico, deflation warnings are so much academic talk for housewives, workers and other low-income residents when it comes to basic goods of necessity. Despite a decline in demand, steep price increases are slamming consumers.

A local reporter’s tour of the border city’s wholesale food distribution center provided a glimpse of the problem. In comparison to 2007, for example, the price for eggs has increased 160 percent, while the price of the staple jalapeno chile has recently jumped more than 200 percent.  Merchants blame natural disasters in agricultural regions, higher transportation costs and the overall financial crisis for driving up costs. Other factors such as the possibility that some food wholesalers are being forced to pay extortion fees to organized criminal gangs could also be part of the picture.

“The consumer goes out less, earns less and spends less,” summed up vendor Marco Garcia.

In Ciudad Juarez, mass layoffs in the export manufacturing sector tied to the US economy are greatly complicating the economic outlook for workers who must keep digging deeper and deeper into pockets that are not being refilled. Besides the 23,000 factory workers who have lost their jobs this year, many others now face production slowdowns.

Sandra Montijo-Duburule, president of the Ciudad Juarez Maquiladora Association, said some plants- particularly in the automotive and electronics sectors- are extending their winter vacation time from one to two weeks. Up against hard times, companies plan to pay their workers half-salaries or no salaries at all during the forced vacations, Montijo-Duburule said.

“The important thing of all this is to save the source of employment,” added the maquiladora industry leader. 

While employment rates dipped, price increases for a spectrum of products in Ciudad Juarez and Mexico were reported early this week. By the first week of November, Mexico’s official rate of inflation had reached its highest level in the last nine years, according to press reports.  For 2008, the country’s rate of inflation was estimated at 6.18 percent. Leading the pack in inflationary goods were beef steak, fruits, vegetables, electricity, and domestic natural gas.

Significantly, the latest price spikes came even before the traditional end-of-the-year and holiday season gouging of consumers.

Not all the price news has been bad, however. Lured by a cut-rate offer reportedly better than any deal in neighboring El Paso, Texas, at least one thousand people lined up outside a Tatung plant in Ciudad Juarez November 23 to get a chance at purchasing a bargain high-definition television.

Sources: Norte, November 24, 2008.  Articles by Arturo Chacon. El Diario de Juarez, November 24, 2008. Article by Gabriel Simental and El Universal.

Mexico Softens Cruise Industry Tax

The final amount of a new tax on cruise ship passengers visiting Mexican waters has been officially published. Beginning on January 1, 2009, cruise ships will be assessed 25 pesos, or about two dollars, for each passenger. The tax is less than the 56 peso fee approved by the Mexican Congress earlier this year, and much lower than earlier legislative initiatives like the ultimately unsuccessful one proposed two years ago by  Guerrero Congressman Amador Campos who sought to assess a charge of approximately $17 on each passenger.

Proponents of a cruise tourist head fee argued that new revenue was needed to pay for maintenance and other related costs at municipal ports where cruise ships dock. Under the new regulation, 80 percent of the money collected will go to the municipalities for conservation, maintenance, cleaning and security. The remaining 20 percent will be deposited into the coffers of the National Migration Institute.  

Senator Luis Coppola, a member of the center-right National Action Party who serves as president of the tourism commission in the Congress’ high body, said President Felipe Calderon opposed the 56 peso fee because he feared it would have an adverse economic impact as well as be difficult to collect. Returned to the Congress, a lower fee of 26 pesos was negotiated.

Citing costs and potential processing hassles, cruise industry representatives also expressed opposition to the fee.

On a related note, an executive of Royal Caribbean, one of two dominant cruise lines in Mexico, recently told a Mexican reporter that Mexico is becoming uncompetitive in the growing international cruise business.

Michael Ronan, vice-president of institutional relations for Latin America and the Caribbean, said destinations such as Brazil and Puerto Rico offer tax incentives, promotions and compensations for each visiting cruise ship passenger.

According to Ronan, each cruise ship arriving to Mexican ports already pays hefty docking and other fees that run into thousands of dollars.

“Mexico has not understood that it no longer competes solely against Dominica and other Caribbean destinations, but that the competition is now global,” Ronan said.
“Ten years ago, Brazil wasn’t really an attractive place for cruise ship visitors and above all for the companies, but the tax incentives and stimulus packages that it offers the cruise lines are such that between this year and next there will be at least eight fixed routes. Panama and Puerto Rico also have the same incentive package.”

 Industry grumbles aside, Mexico has identified the cruise industry as a strategic component of its current tourism development strategy. And last April, Mexican and Central American officials agreed to jointly promote the Mesoamerican region as one big cruise experience. Most recently, it was announced that small Puerto Penasco on the Sea of Cortez will be the site of a new cruise ship home port that could host as many as 200 boats every year once it is completed in about three years.

In 2007, more than 6 million cruise ship passengers and crew members spent $478.5 million in 19 Mexican ports, according to the federal Secretariat of Tourism.  

Not all Mexicans welcome the cruise ship industry with open arms. During the last few years, significant citizen opposition has scuttled planned expansions in Cozumel and Zihuatanejo, while citizens in other coastal communities like Huatalco have questioned the industry’s benefits and drawbacks.

Critics charge the cruise ship industry endangers increasingly imperiled coral reefs, causes air and water pollution, consumes scarce local water supplies, leaves behind large amounts of garbage, creates traffic congestion, and hogs local waterways. They contend that cash outlays by cruise-ship travelers, who spend only a few hours at a time in Mexican port towns, does not offset the environmental and social costs of the industry. Industry representatives dispute the assertions.

Additional sources: El Universal/Notimex, November 13, 2008. Arizona Republic, October 25, 2008. La Jornada,  October 1 and 10, 2008.  Articles by  Miriam Posada Garcia and the Notimex news agency.  El Diario de Juarez, September 17, 2008. 

Peso Plunge Squeezes Border

Global economic convulsions sent the value of the Mexican peso in relation to the US dollar plummeting to new lows this week. In some areas of the borderlands and in the Mexican interior, the value of the peso briefly dived from about 10 to 14 or 17 to the dollar-a drop comparable to or greater than the 1994 peso devaluation. The dramatic hit to the peso, which had been so strong against the dollar in recent months that talk of the “super peso” reemerged, will have significant effects on the US-Mexico border economy.

For starters, Mexican money exchange houses saw business evaporate this week. “There are no retail sales,” shrugged an employee of a money exchange outlet in
Nuevo Laredo, Tamaulipas. “Sales plunged because we do not have any buyers.”

In Matamoros, Tamaulipas, the former president of the an association of money exchange outlets in the border city reported business was down 30 percent.

“We know this is not exclusive to Mexico, that it is a world crisis,” said Genaro Alonso Tavera.

The sudden shift in exchange rates began to be noticed in the flow of two-way traffic between Mexico and the United States. Traffic lines to the United States, where the price of dollars had soared, were visibly shorter at the international crossings leading from the Tamaulipas border cities of Matamoros, Reynosa and Nuevo Laredo. On the US side, merchants in Laredo, Texas, worried that Mexican customers who keep them in business would cut back on shopping. The scenario facing Laredo businesses is similar in other US border cities where Mexican shoppers usually keep the economy humming.

The peso’s downturn is also bad news for private Mexican businesses and public institutions that have their debts in dollars.

On the other hand, some Mexican border businesses could benefit from the peso plunge.  Longer lines at Matamoros gasoline stations were already reported as Mexican fuel became a bigger bargain.

Jose Luis Garcia Arenas, president of the money exchange branch of the Ciudad Juarez Chamber of Commerce, urged calm and predicted the exchange situation as well as the Mexican economy would stabilize.

To halt the wild downward spiral in the peso’s value, the official Bank of Mexico began making more dollars available for purchase this week. It was the first time Mexico’s central bank was forced to step in to prop up the peso since 1998.

According to Mexican economist Rogelio Ramirez, US and international economic indicators made the peso’s slide virtually inevitable.  “What changed wasn’t reality but the government’s recognition of reality,” Ramirez said.

Despite the Bank of Mexico’s intervention, the peso continued showing weakness as the week drew near an end.  On Thursday, October 9, banks in Ciudad Juarez across from El Paso, Texas, finished the day paying 12.29 pesos for each dollar and selling 12.96 pesos for each dollar. Rates at money exchange outlets were slightly better for dollar seekers.

Gerardo Esquivel, an analyst with the College of Mexico, said decreasing migrant dollar remittances and declining prices for oil, Mexico’s principal export, were likely to affect the peso for some time.

“It’s possible to conclude that the Mexican peso will tend to stabilize in the near future at a level greater than it had shown in recent months, but less than the panic levels and nervousness we’ve observed in recent days,” Esquivel said.  

Sources: Norte, October 8 and 9, 2008. Articles by Antonio Rebolledo. Enlineadirecta.info, October 8 and 9, 2008. Articles by Gaston Monge, Hugo Reyna  and Federico Zuniga Garcia. Diario de Juarez,  October 9, 2008. Univision, October 9, 2008. La Jornada, October 9, 2008. Articles by Juan Antonio Zuniga and the Notimex news agency. El Universal, October 9, 2008. Article by Gerardo Esquivel.

Chihuahua David vs. Arkansas Goliath

Like other residents of small Mexican towns who subsist on the periphery of industrial centers, Raul Avila Andujo was recruited by the big company to work in the city. In Avila’s instance, this meant going to work for the Chihuahua City branch of Wal-Mart, which offered to transport Avila and his rural neighbors from the village of La Villita to the workplace every day. Working in the store’s produce section, the arrangement worked well for six years, Avila said, until the management informed Avila and co-workers one day that they would have to find their own way to work.

“It was as if we were fired,” Avila said. “There was still work, but we had no way to get there.”

Miffed at the prospect of an extra, substantial expense, Avila went to see a lawyer.

Reviewing his new client’s pay stubs, Chihuahua lawyer Juan Davila noticed something interesting. It seemed Wal-Mart was deducting $40 from Avila’s bi-weekly paycheck in return for coupons that could be redeemed for goods at Wal-Mart or one of the other Mexican businesses owned by the global giant-Sam’s Club, Vips, Bodega Aurrera, and several others. Claiming an irregularity, Davila took Avila’s case to the federal Labor Arbitration and Conciliation Board last year. The federal agency ruled in favor of Wal-Mart, but Avila’s case headed to Mexico’s Supreme Court. On September 4, it was revealed that Avila had beat the big boys.

In its ruling, the country’s high court held that Wal-Mart had engaged in a practice prohibited by Article 123 of the 1917 Mexican Constitution disallowing an employer from directly or indirectly obliging an employee to buy products in certain establishments. In their decision, the Supreme Court justices compared Wal-Mart’s
policy to the old company store prevalent during the dictatorship of  Porfirio Diaz in the late 1800s and early 1900s.

 In a hasty response, Wal-Mart insisted that its paycheck deductions were entirely voluntary and beneficial to its employees, since workers were provided with an electronic card to buy goods at preferential prices at company outlets.

“91.8 percent of the employees have voluntarily opted for this benefit,” Wal-Mart said.

“We are a company committed to the improvement of the quality of life of our employees and Mexican families, as well as with compliance with the laws and decisions of the nation’s courts,” the statement continued, adding that Wal-Mart will “analyze with much interest” the Supreme Court’s ruling and its implications for the employee company’s benefits package.

Nonetheless, the impact of the Avila decision is expected to be very limited-at least for now.

“It only protects the one (Avila) who solicited legal protection,” confirmed an unidentified Supreme Court spokesperson.

Garnering widespread press attention, the Avila decision came at an inopportune moment for Wal-Mart. Busy promoting its image as an ecologically-minded, socially-responsible company, Wal-Mart had staged a flashy celebration in Mexico City the very day the Supreme Court decision was announced.

President Felipe Calderon and other dignitaries showed up for a 50th anniversary celebration of Wal-Mart-owned Aurrera, a department and grocery store which was once entirely Mexican-owned. In a speech, President Calderon fondly recalled sipping coffee at another Wal-Mart-owned business, intellectually hip Vips, and praised the US-based corporation for bringing jobs to his country. He also thanked Wal-Mart for helping victims of natural disasters in Tabasco and Chiapas.

“It makes me happy whenever enterprises the global size of Wal-Mart decide to put down firm roots on Mexican soil,” President Calderon said. “The truth of the matter is that whenever someone believes in Mexico, invests in Mexico and generates jobs in Mexico, it is good for the country.”

Counting more than 100,000 employees, Wal-Mart is Mexico’s largest private employer.  In the month of August alone, Wal-Mart announced the opening of seven new stores and centers and the creation of more than 1,600 permanent jobs in Mexico.  

Prominent Mexican historian Enrique Krauze also attended the Wal-Mart/Aurrera
birthday bash.

The firm’s evolution and growth, Krauze said, provided not only a lesson but “joy and inspiration.”

The celebration in the Mexican capital, however, was overshadowed in the print media by the Avila decision, with some stories giving it a David vs. Goliath flavor. And as is increasingly common in Mexico, the news riled up cyberspace. Pros and cons sent e-mails to publications including El Diario de Juarez and La Jornada.

A writer identified as Antonio said he hoped that a “populist decision” would not discourage foreign investment, and that it was unfair to compare the involuntary company stores of the Porfiriato with Wal-Mart, where “quality is notable and the prices are very competitive…”

Taking an opposite track, an unidentified writer blasted Wal-Mart for putting thousands of mom-and-pop stores and small enterprises in Mexico out of business, for exploiting its workers and for not allowing employees to organize.

“(The company) fools people into buying with usurious credit rates and if this isn’t enough, its brand products are manufactured in poor countries where they pay less than a dollar for each item which are then sold for $140. I ask, “Who is standing up for the
Mexicans?, wrote the anonymous cyber author. 

Striking a more neutral tone, a writer only identified as Paula said Wal-Mart’s paycheck deduction-for-supplies system was also practiced by the large SMart and Soriana store chains.

As for ex-Wal-Mart employee Raul Avila, it is said he could receive $50,000 in compensation from the company. Humberto Flores Hinojoso, president of the Chihuahua City labor board, could not immediately confirm the amount Avila might get.  

Sources: Norte, September 10, 2008.  Article by Angel Zubia Garcia. Frontenet.com, September 7, 2008. El Universal, September 7, 2008. El Diario de Juarez, September 4 and 7, 2008. Articles by Luis Alonso Fierro and El Universal. La Jornada/Reuters, September 5, 2008. Walmartmexico.com.mx., August and September 2008. Press releases.  

Immigrant Farmworkers Get Legislative Support

Pro-union California farmworkers received a boost from the California State Senate this week. By a 23-15 vote, lawmakers approved a measure August 18 that will allow workers to opt for union representation via an automatic check-off system refereed by a neutral mediator agreed to by labor and employers. Sponsored by California Assemblyman Fabian Nunez (D-Los Angeles), the bill, AB 2386, also permits workers to participate in traditional state-run ballot booth elections if they so desire.

The California Democrat argued that a stronger representation system was needed in spite of union and health and safety provisions already on the books.

“AB 2386 offers a fair, secret ballot mechanism that helps farmworkers protect their rights under law,” Nunez said.

Nunez’s bill was backed by the United Farmworkers of America (UFW), which staged a pray-in attended by hundreds of farmworkers at California Governor Arnold Schwarzenegger’s Sacramento office the same day as the State Senate vote.

According to UFW President Arturo Rodriguez, only 7 percent of California’s 500,000 farm hands are unionized. Rodriguez and other farm labor advocates have long contended that California’s Agricultural Labor Relations Board favors employers and drags-out union elections to the disadvantage of organizing campaigns.

Several highly-publicized deaths of farmworkers from heat stroke contracted in the fields helped galvanize support for Nunez’s bill, with farmworker advocates arguing that the best way to protect worker rights and safety was for laborers to have a strong union.

Since 2004, 15 farmworkers have reportedly succumbed in the Golden State to heat stroke. The two most recent deaths reported were those of Jorge Herrera, who died on July 31 while harvesting grapes, and 63-year-old Maria de Jesus Alvarez, who perished on August 2.

Most farmworkers in California are immigrants from Mexico and other Latin American countries, and many complain of bad working conditions.

“The hardest thing is to work in the sun,” said Elias Perez, an immigrant from Oaxaca, Mexico, who participated in the Sacramento protest. “Sometimes I feel half dizzy, especially when the temperature reaches 98 degrees.

” Assemblyman Nunez, who toured the state’s fields for three days this summer as part of a video documentary production, said he encountered workers earning less than the minimum wage and working 14 hours per day in the hot sun.

“This is not possible,” Nunez added, “when we have approved laws here in (Sacramento) guaranteeing dogs and cats the right to be fed.”

Endorsing the current system of ballot booth elections, some employer groups oppose the Nunez bill. “This bill is an affront to the origins of democracy and to the privacy of the workers,” said Barry Bedwell, president of the California Grape and Tree Fruit League.

After the State Senate vote early this week, Nunez’s legislation was scheduled to return to the California State Assembly for a concurrence vote and then to Gov. Schwarzenegger, who can either veto the measure or sign it into law.

Sources: La Opinion (Los Angeles), August 19, 2008. Article by Araceli Martinez Ortega. Fabian Nunez, August 18, 2008. Press release. Univision, August 18, 2008. Ufw.org, August 8, 2008. Press release.

Pemex  Plans Fuel Supply Reduction

In an unpopular move, Mexico’s state-owned Pemex oil company announced it will reduce gasoline supplies for Baja California soon. Ramiro Zuniga Salazar, president of the Onexpo Baja Gasoline Station Operators Association, said Pemex informed gas station operators in a July 7 letter that it would begin reducing gasoline deliveries of the Magna brand from 80 million liters to 72 or 74 million liters per month. A gallon is equivalent to 3.8 liters.

Coming on top of diesel shortages in recent weeks, the decision spurred worries of negative economic consequences for different economic sectors.

“The federal authorities are showing a lack of respect to the Baja California community,” charged Joaquin Avina Sanchez, president of the Tijuana Gasoline Station Owners Association.

It wasn’t immediately clear if Pemex’s new policy will affect other regions of the border outside Baja California.

Pemex’s decision was attributed to a 30 percent increase in demand for gasoline and diesel in Baja California during the past few months.  Some blame the consumption surge on US citizens who drive across the border to take advantage of cheaper Mexican fuel prices and fill up their tanks. A gallon of gas costs $2.61 in Mexico, compared with more than $4.00 per gallon in California. Also well above the $4.00 mark, diesel sells for $2.20 in Mexico.

The Mexican government subsidizes gasoline prices to the tune of $12 billion annually, estimated Rafael Amiel, managing director of Latin American services for the Washington, D.C.-based firm Global Insight.

Frontera Norte Sur has received e-mails from a couple readers in Baja California and California who report fuel scarcities south of the border and opportunistic profiteering north of the border. According to one reader, Mexican truckers are filling up 55 gallon tanks with diesel and then selling it in the Los Angeles area for $3.50 per gallon. 
 
The irony of Mexican border gasoline being sold or consumed in the United States is that Mexico currently imports an estimated 323,000 barrels of gasoline every day, according to Global Insight’s Amiel

Other sources credit the border gas crunch on an unexpected demand from Mexican consumers who routinely gassed-up while in the United States but now do it at home. In particular, the Mexican trucking industry that services Tijuana, Ciudad Juarez, Reynosa and other cities where maquiladora plants and cross-border commerce are important is said to be an especially loyal new customer.

Challenging the notion of a fuel shortage, Baja California Governor Jose Guadalupe Osuna Millan urged Pemex to improve its distribution system. “The diesel is in Rosarito,” he said. “There are no lines of US citizens.”

Mexican consumers, however, have begun complaining of service denials or extortions by gas station employees.  

Mario Osuna Jimenez, Baja California delegate for the Federal Attorney General for
Consumer Protection ({Profeco) said his office has received 10 complaints from citizens in the last three weeks. According to Osuna, some customers reported they were either refused gasoline or told the fuel would cost above the established price. The Profeco official said three teams of agency inspectors are in the field checking for “possible anomalies.” A report is due later this week, he said.

Together with local businessmen, officials from Baja California state government were scheduled to meet with Pemex July 9 to discuss the fuel supply situation facing Baja California.

As Baja California’s fuel problem unfolded, Pemex reiterated its contention that
Mexico is simply running out of oil. In a recent letter to the lower house of the Mexican Congress, Pemex said the country has only 9.2 years of proven oil reserves remaining.  

Pemex’s congressional report comes at a time when the political battle over President Felipe Calderon’s proposed energy reform law is heating up in the Congress and in the streets, where a mass movement led by former Presidential candidate Andres Manuel
Lopez is gathering steam. If approved, President Calderon’s legislative package will open the door to greater foreign investment and involvement in the energy sector.   

The Mexican press, meanwhile, continues to run stories on the US fuel price crisis, emphasizing the economic hardships experienced by many on this side of the border. A  story  that received attention this week was about two women, one from Kentucky and one from Indiana, who were arrested on prostitution charges for allegedly offering sex in exchange for gasoline or a gasoline  card.

Additional sources: El Sol de Tijuana, July 9, 2008. Frontera/SUN, July 9, 2008. La Voz de la Frontera, July 9, 2008. Article by Jose de Jesus Jimenez Vega. El Universal, July 8 and 9,  2008. Articles by Julieta Martinez and David Aguilar. Enlineadirecta.info, July 8, 2008. Articles by Fernanda Garza and editorial staff. La Jornada/Notimex, July 8, 2008.

The Golden Refrigerator: Chills on the Mexican Economy

In repeated statements during the last few months, high-ranking members of the Felipe Calderon administration, including the president himself, have assured the public that Mexico is well-positioned to resist the economic storm that’s lashing the United States. But different factors ranging from steep commodity price hikes to some lay-offs in the maquiladora export sector are putting chinks in the armor plating. A serious trouble zone is emerging in the consumer credit sector, which has helped drive the Mexican economy during the last four or five years.

New numbers from the federal government’s National Commission for the Protection and Defense of Financial Services Consumers (Condusef) report that the percentage of bank-issued credit card debts in arrears reached 7.6 percent in April of this year. The figure follows a steady rise in bad credit card debts from June 2005, when only 3 percent of such loans were overdue.

Mexican officials have issued mixed messages about the slide of many consumers into unmanageable debt.  In 2007, Condusef  President Luis Pazos predicted bad credit card debts would reach the 7.1 percent threshold in June 2008, a number that was surpassed two months ago. Speaking last year, Pazos warned that a 7.1 percent bad debt load would be dangerous to the health of the Mexican banking system.

In an interview with Frontera NorteSur earlier this year, Jorge Aceves, assistant director for Condusef  in the state of Guerrero, said the credit card debt load was still not a major problem. “It’s not at a critical stage,” Aceves affirmed. Commercial banks, he said, were
working with credit card holders to restructure debts. 

Still, the percentage of all consumer bank loans considered unpayable grew from 6 percent in 2006 to 10 percent by March 2008. In another warning sign, Condusef has reported that 60 percent of bank-issued credit card holders make only the minimum payment due every month.  The consumer information and conflict resolution service cautioned that account owners who have the habit of making the smallest possible payment will wind up paying astronomical sums for purchases.

To illustrate its point, Condusef gave the example of a $1,000 refrigerator purchased with a credit card. In Mexico, the credit card transaction entails forking out an annual commission fee of $36 plus the 15 percent value-added tax, making a minimum payment of  3 percent of the total debt and paying the current annual interest rate of 28 percent in 240 monthly  payments. At the end of 20 years, Condusef calculated that the interest-driven cost of the refrigerator would be more than $7,500-a very high price for an appliance likely to stop functioning even before it is paid off in full. Worse yet, consumers would still have a $1,000 nominal charge to pay for the ancient fridge.

Javier Taja, president of the Guerrero branch of the National Union El Barzon, an organization of bank debtor advocates, contended that interest rates charged by financial institutions like Citigroup’s Banamex reek of usury.  The increase in bad credit card debts is “worrisome” for the Mexican economy, Taja told Frontera NorteSur. “We could have a generation of Mexicans that isn’t eligible for credit and is listed with the Credit Bureau,” Taja said. “This means that a Mexican can’t get a car or a house later on, and we could have an economic contraction.”

Mexican banks, virtually all of which are owned by foreigners, have embarked on an aggressive credit card promotion campaign during the last several years. According to Condusef and the Bank of Mexico, an estimated 10 percent of approximately 13 million individual credit card holders have 8 or more credit cards; the average line of credit for each account is pegged at $2,800.

“The problem is not with the number of cards, but with the way they are used,” said Luis Fabre, Condusef technical vice-president. “Each credit card owner has an average of 1.4 cards, but we all have experiences, perhaps in our own families, of people who like the Americans, flash their billfold of cards and possibly have 13, 15 or 17 cards.”

Bad debts notwithstanding, Mexican banks remain very profitable. According to the Bank of Mexico, in-country banks average a 23.8 percent rate of profit on available capital. The Mexican profit margin compares with 13.4 percent for the United States and 19.2 percent for Chile.

Additional Sources: El Diario de Juarez, June 13, 2008. La Jornada, June 12 and 13, 2008. Articles by Juan Antonio Zuniga and Roberto Gonzalez Amador.

Ford Motor Company Shrinks in US, Grows in Mexico

Ford Motor Company might be cutting jobs in the United States, but the flagship automaker is planning on adding more jobs south of the border. At a meeting with Mexican President Felipe Calderon late last week, Alan Mulally, Ford president and chief executive officer, announced that his company will invest three billion new dollars in an important industrial expansion slated for three regions of Mexico.

Almost one third of the new investment, or $838 million, will be spent on rolling out a new production line for diesel motors at Ford’s plant in Chihuahua City. The motors will be manufactured for light and medium-sized commercial trucks. Chihuahua Governor
Jose Reyes Baeza praised Ford’s decision, adding that he expected the capital infusion from the north to have a regional economic impact. Gov. Reyes Baeza called the new generation of diesel motors “environmentally-friendly models.” Ford first located in Chihuahua back in 1982.

In addition to the Chihuahua expansion, Ford plans to make its existing plant in
Cuautitlan, Mexico state, the place where the Ford Fiesta model will be made starting in 2010. A third project will involve a joint venture with Getrag to open a transmission manufacturing plant in the central state of Guanajuato. Initial press accounts of Ford’s  Mexican plans estimated that the multi-billion dollar investment will yield between 4,500-10,000 direct jobs and upwards of 30,000 indirect ones.

President Calderon said the investment by the Detroit-based auto giant is in sync with his administration’s goals of netting foreign investment, fostering economic growth and slashing the poverty rate.

“It’s only with a prosperous economy that we will be able to strike at poverty with the urgency that society, that the Mexicans demand,” President Calderon declared.

Sources: El Universal, May 31, 2008. Article by Ramiro Alonso. El Diario de El Paso, May 31, 2008. Article by Gabriel Simental. El Heraldo de Chihuahua, May 31, 2008. Mlive.com (Detroit Bureau), May 30, 2008. Article by Rick Haglund.

Spain Reconquers the Southwest, Old Lands  

As Mexico approaches the 200th anniversary of its war of independence from Spain, talk is rife of the Spanish reconquest.  In recent years, Spanish businesses have invested large amounts of capital in the Mexican tourism, banking, media and other economic sectors. Honored as the invited country at this year’s San Marcos National Fair in Aguascalientes, Spain’s presence at the month-long fiesta projected an ironic, symbolic meaning.  Now, Spanish money is on the move in its old territory north of the Rio Grande.

US federal banking regulators have given the go-ahead to a multi-state bank merger pursued by the Spain-based Banco Bilbao Vizcaya Argentina, S.A. (BBVA).  The deal will fold the long-established Laredo National Bank (LNB) which was once controlled by Mexican billionaire Carlos Hank Rhon, into the BBVA-owned Compass Bank. The Spanish company purchased Compass Bancshares for $9.12 billion in 2007.

Two other banks, State National Bank and Texas State Bank, will also become part of the expanded Compass Bank. Once the merger is finalized by the end of 2008, Compass will count on 593 branches in Arizona, New Mexico, Colorado, Texas, Alabama, and Florida.

Operating with 40 branches across Texas, LNB’s $3.5 billion in assets, which include important trust funds headquartered in the border city of Laredo, will help bring Compass’ asset portfolio to $58.6 billion. A large international firm, BBVA has $700 billion in total assets. The US merger will expand the range of financial services offered to clients in various states. “We’re getting additional products that we’ve not had in the past, which will be very good for customers,” said Edward Whitworth, LNB chairman.  

BBVA is far from alone among Spanish banks in its forays into the US market. Santander, Caja Madrid, Banco Popular and Banco Sabadell all have acquired interests in the US. Luring Spanish capitalists back to North America are a variety of economic factors including the weak dollar, the growth of Latino populations and buy-out opportunities arising from the collapsing financial structure connected to subprime mortgage crisis.

“The appreciation of the euro is a very important factor and also the fact that Miami is a key financial center for Latin America and the US Hispanic market,” said David Schwartz, president of the Florida International Bankers Association and vice-president of the Regions Bank Financial Corporation. The current international economic situation is favoring Spanish banks in the US, said Fernando Perez-Hickman, president of the Trans-Atlantic Bank, which was acquired by Sadabell Atlantico last year.

A May 16 Houston meeting of the Spain-US Council is expected to discuss investment possibilities for Spanish banks in this country. 
The expansion of Spanish banking abroad has not come without controversy. For instance, BBVA and Santander were put on trial for alleged financial crimes at a popular tribunal organized by non-governmental organizations in Lima, Peru, this week. Staged by the Linking Alternatives network, the tribunal was organized as an alternative event to the preliminary meetings of the Fifth Latin American and Caribbean-European Union Summit scheduled for the coming weekend in the Peruvian capital.

According to a document posted on the group’s website, Santander and BBVA took over
61 banking institutions in Latin America from 1997 to 2002. An estimated 70 percent of the increase in BBVA’s 2005 earnings was attributed to the performance of its Mexican affiliate Bancomer.  Linking Alternatives plans to issue verdicts on its probes of Spanish and other transnational corporations on May 16.

Additional sources: Hoover’s/EFE, May 15, 2008. Hoover’s/Inter Press Service, May 15, 2008. Laredo Morning Times, May 14, 2008. Article by Ashley Edwards. Enlazandoalternativos.org. Article by Erika Gonzalez and Pedro Ramiro.

 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 fortunes of Puerto Penasco's tourist industry is the propensity of US tourists to seek safe vacation getaways in the wake of 9-11, according to some observers. Following the pattern of international tourist development, Puerto Penasco has become a second home for many affluent tourists who were enamored by their first visits and then decided to purchase land.

Some credit fallout from the US housing market across the border for also propelling Puerto Penasco's rapid growth. "Low mortgage interest rates and the boom in real estate values in the United States allowed many people to make extra money to invest it in cheaper properties," said Juan Luis Martin, president of the Playa Norte company.

Investments in the once-quiet resort have soared from an estimated $56 million dollars in 2001 to a projected $1.2 billion dollars for the 2006-09 time period. Residential real estate sales are so hot in Puerto Penasco that tiny apartments in the upscale Bella Sirena development fetch about $600,000 dollars. Still, for the less well-heeled, Puerto Penasco offers options in the form of 4 trailer parks that rent lots with utility hook-ups for $20 dollars per night.

Exploding on the coastal fringes, northern Mexico 's development bonanza could move inland if an idea floated by Mexican billionaire Carlos Slim Helu comes to pass. The head of the new Ideal development and construction company, Slim recently proposed the construction of a new highway along the northern Mexican border.

Speaking at a border development forum in Mexicali this month, Slim suggested the opening of a Mexican highway running parallel to US Interstate 10 across the border. According to Gabriel Flores Viramontes, the president of the Business Coordinating Council of Ciudad Juarez, Slim contended that a new border highway would enhance the economic competitiveness of Mexico 's northern border cities. Among others, outgoing Mexican President Vicente Fox and prominent Ciudad Juarez businessman Miguel Fernandez Iturbide attended the Mexicali meeting.

Sources: Norte, October 13, 2006 . Article by Cesar Ruiz. La Jornada, October 8, 2006 . Article by Antonio Heras and the AFP news agency. Agencia Reforma/La Voz de Nuevo Mexico , July 21, 2006 .

Tamaulipas-Vietnam Relations on the Upswing

Increasingly, Asian investors, businessmen and entrepreneurs are carving their mark on the Mexico-US borderlands. Japanese, Korean and Chinese companies and individuals all play an important role in the 2,000-mile zone that stretches from Tijuana to Matamoros . Now, another Asian country, Vietnam , is putting its stamp on the region. A recent visit to the border state of Tamaulipas by Ho Quang Minh, project coordinator for the International Cooperation Institute of Vietnam, resulted in pledges of greater ties between the northern Mexican state that borders Texas and Vietnam .

Victor de Leon Orti, state minister of rural development, said Ho Quang Minh's visit yielded positive gestures for improved cooperation in the education, agricultural and healthcare fields.

"He showed the interest of his internationally-recognized organization in establishing broad collaboration between Tamaulipas and ( Vietnam ) that allows us to search for strategic points in international trade for our high-quality products,” de Leon said.

According to the Tamaulipas state official , Ho Quang Minh offered assistance in boosting Tamaulipas' aquaculture industry, with an eye toward marketing products abroad.

"He proposed that we could work jointly here to increase the production of shrimp, catfish and lobster, all of which could be sold in countries like Japan ," de Leon said. Other products identified for inclusion in possible Vietnamese-Tamaulipan joint export projects include cactus and tequila. De Leon added that Ho Quang Minh also offered Vietnamese expertise in the realms of education and alternative medicine, especially in regards to promoting acupuncture.

Source: Enlineadirecta.info, August 6, 2006 . Article by Roberto Aguilar Grimaldo.

Mine Disaster Report Blasts Government Officials

A report from Mexico 's official National Human Rights Commission (CNDH) has blasted federal officials for neglecting unsafe conditions at the Pasta de Conchos coal mine in northern Coahuila state, where a February 19 explosion and cave-in took the lives of 65 miners and injured 11 others. According to the CNDH, federal Labor Ministry officials assigned to the agency's Coahuila delegation had "clear knowledge" of unsafe conditions at Pasta de Conchos prior to last winter's disaster.

Made public on July 17, the CNDH's Recommendation 26/2006 urges Labor Minister to Francisco Salazar to undertake action against his personnel responsible for overseeing labor conditions at the Pasta de Conchos facility in the municipality of San Juan de Sabines, and to devote sufficient resources and training to Labor Ministry personnel so disasters like the one that occurred at Pasta de Conchos are not repeated. Quickly responding to the CNDH's report, the Labor Ministry promised a speedy answer to the recommendations, but noted that federal officials are already taking various measures to ensure worker safety in Mexico . An advisory body, the CNDH does not have the power to order policy changes.

In an official statement, the Labor Ministry said the CNDH's conclusions coincide with similar ones reached by the federal government after the fatal February 19 explosion, which led officials to “make decisions and reinforce concrete actions, many of which were already in effect prior to the disaster.” According to Cristina Euerbach, a representative of Pastoral Mexicana, non-governmental organization concerned with workers' rights, eight miners have been killed in accidents in different parts of Mexico since the Pasta de Conchos tragedy.

Operated by a subsidiary of the Mexico City-based Grupo Mexico , the Pasta de Conchos mine was inspected by Labor Ministry officials in July 2004- almost two years before the disaster. According to the CNDH's investigation, inspectors found 48 safety and hygiene infractions during their review, seven of which were considered of an urgent character to address. The unsafe conditions included oil and gas leaks, missing safety devices and malfunctioning lighting, among others, according to the CNDH. The human rights agency contends that Labor Ministry inspectors did not verify company compliance with safety regulations until February 7, 2006 - only 12 days before disaster struck.

Almost immediately following the tragedy, allegations surfaced of corruption in the ranks of the Labor Ministry's Coahuila offices. In its report, the CNDH noted that Coahuila Labor Ministry employees complained about not receiving adequate resources from the home office to carry out their jobs properly. Finding constitutional violations of labor rights, the CNDH recommended that the Labor Ministry compensate the dead miners' families

Carlos Pavon Campos, political secretary of the National Mineworkers Union , said the CNDH's report confirms the disaster was an "industrial homicide," as mine union leaders have long contended. While not publicly commenting on the CNDH's report, Grupo Mexico issued a statement July 19 that highlighted the company's efforts to recover the bodies of dead miners from Pasta de Conchos. Grupo Mexico said it has spent more than $10 million dollars and employed advanced technology in the arduous recovery work. In late June, rescuers recovered the body of 49-year-old worker Felipe de Jesus Torres Reyna, but 64 other victims remain buried in the mine's rubble.

Grupo Mexico stressed that the company is providing economic, medical and emotional support to victims' families, so far, to the tune of nearly $5 million dollars. "We respect and share the pain of the families," said Dr. Enrique Valverde, coordinator of the company's humanitarian support program. "We want them to know that we are doing all that is within our means every day to recover the remains.." According to the Labor Ministry, Grupo Mexico has paid 63 miners' families about $70,000 dollars each in compensation for the loss of their loved ones.

Identified with the wealthy Larrea family, Grupo Mexico 's board of directors include individuals associated with Kimberly Clark Mexico and the Carlyle Group. A transnational corporation with mining, smelting and railway interests in several countries, Grupo Mexico is the owner of the mothballed Asarco copper smelter in El Paso , Texas , which is currently at the center of a cross-border environmental battle over a company proposal to resume operations.

Clearly finding fault with government officials charged with overseeing Pasta de Conchos, the CNDH'S report contrasted sharply with a earlier report issued this month by a working group of the federal Chamber of Deputies. Led by Deputy Lucio Galileo Lastra of President Fox's National Action Party, the working group concluded that "no evidence exists to identify the causes of the lamentable incident." However, the report did not reflect the full opinion of the congressional commission.

Endorsed by legislators from the PAN, PRI and Green parties, the report was criticized by legislators from the PRD, PT and Convergence for Democracy parties, who issued their own report June 21 concluding that sufficient information was available to pursue legal charges against the Labor Ministry, Mexican Social Security Institute and Grupo Mexico for "negligence in the Pasta de Conchos accident" and omission of safety and health measures.

Sources: Proceso/Apro, July 18 and 21, 2006. Articles by Miguel Cabildo and Rosalia Vergara. La Jornada, July 18, 2006 . Article by Patricia Munoz Rios. El Universal, July 18, 2006 . Article by Jorge Herrera. Grupo Mexico , July 19, 2006 . Press statement. Federal Labor Ministry, July 18, 2006 . Labor Ministry. National Human Rights Commission ( Mexico City ), July 17, 2006 . Press statement. El Sur/Agencia Reforma, June 24 and June 25, 2006 .

New Remittance Numbers

Soaring in importance, migrant dollars are playing a bigger and bigger role in sustaining many Mexican communities. New figures recently released by the Bank of Mexico report a big jump in the flow of remittances from early 2003 to early 2006. In the state of Aguascalientes , for example, a family of four took in an average of $323 dollars in remittances every month during the January-March 2006 quarter. In the same quarter of 2003, the average monthly remittance income in Aguascalientes for a four-person household was just over $200 dollars. For many households, a $323-dollar income is enough to pay the monthly rent and utility bills and still have a little bit of extra spending cash left over.

Despite the incorporation of many different Mexican communities into the migrant stream, the Bank of Mexico's study reported that the bulk of remittance monies is sent to the traditional migrant-expelling states of Michoacan, Jalisco and Guanajuato, plus the federal capital of Mexico City . During the time period studied by the Bank of Mexico, 45 percent of all remittances registered in Mexico were received in the four entities. The uneven geographic distribution of remittances suggests that migrants from central Mexico and the capital might be obtaining higher-paying jobs in the United States than their counterparts from newer, migrant-expelling regions who have less time and connections north of the border. Also, it's likely more people from the four dominant remittance-receiving entities are working in the United States than migrants from other states.

In the case of Michoacan, the $595 million dollars in remittances received during January-March 2006 accounted for a full 11.5 percent of the state's gross domestic product. Neighboring Jalisco, which boasts a bigger population and industrial base than Michoacan, received $456 million dollars during the first three months of this year, an amount that made up an estimated 3.6 percent of the state's gross domestic product. Michoacan, Zacatecas, Guanajuato and Aguascalientes were the states registering the highest amounts in average remittances per-family, while Baja California Sur , Yucatan , Quintana Roo and Nuevo Leon were the states with the lowest.

Noticeably absent from both the high and low end of the remittance spectrum were the northern border states of Baja California, Sonora, Chihuahua, Coahuila, and Tamaulipas. The Bank of Mexico's numbers were based on a study of money exchange houses.

Source: El Sol del Centro (Aguascalientes), June 4, 2006.

Mexico and Guatemala Move Forward with Regional Energy Plan

The governments of Mexico and Guatemala took another step forward recently in implementing the controversial Plan Puebla Panama , a regional development strategy that proposes a series of mega-projects economically linking southern Mexico with the tip of South America . In a ceremony held earlier this month in the southern Mexican city of Tapachula , Chiapas , Mexican President Vicente Fox and Guatemalan President Oscar Berger signed an agreement that will connect power lines between Mexico and Guatemala . Estimated to cost $40 million dollars, the pact will allow Mexico to export electricity to her southern neighbor. The first line is expected to be constructed between Tapachula and Los Brillantes , Guatemala .

Alfredo Elias Ayub, the general director of Mexico 's Federal Electricity Commission, said the agreement was the first step in a regional energy grid threaded by more than 1,000 miles of power lines and connections to electrical substations in each of the Central American countries. Elias Ayub said the overall cost of the regional energy project, surpassing more than $320 million dollars, will be supported by the Inter-American Development Bank and the governments of Spain , Colombia and Mexico . According to the Mexican official, the joint financing scheme will permit "the consolidation of a regional electricity market."

Elias Ayub predicted that the demand for electricity in the Central American countries will grow at an annual rate of 5 percent during the next 15 years. He added that the regional electricity strategy should make an additional 300 megawatts available for consumption, or about 8 percent extra for the market.

Source: El Financiero, June 14, 2006. Article by Eduardo Ortega.

Anti-Nafta Sentiment Rises

Concerned about the looming elimination of tariffs on different agricultural products, Mexican farm and labor organizations are renewing calls for a renegotiation of sections of the North American Free Trade Agreement (Nafta). In Tamaulipas state, leaders of the Federation of Rural Landowners and the Tamaulipas Regional Ranchers Union support the growing demands to reopen the agricultural clauses of Nafa for revision. Eduardo Espronceda Galindo, the president of the landowner's group, contended that increased trade liberalization will trigger a larger "exodus to the big cities." Espronceda's warnings come less than two years before all tariffs on corn, bean and powdered milk products are set to expire.

Anticipating economic blows from the 2008 tariff tear-down, several Mexican national organizations have prepared a preliminary document that urges the next Mexican president to demand either the partial suspension or cancellation of Nafta's agricultural provisions. Sometimes identified with the PRI and PRD political parties, the organizations backing the appeal include the Mexican Electrical Workers Union, Caritas, the General Union of Workers and Farmers (Ugcom), and the big National Farmers Confederation. The groups maintain that Nafta has "represented the total collapse of the agricultural and industrial productive economy," resulting in massive unemployment and the disappearance of thousands of small businesses.

"Another reason to cancel Nafta," continues the document cited in the La Jornada newspaper, "is that an illegitimate government signed it in 1993, a government that was the product of electoral fraud and the illegal imposition of a regime that didn't respect Mexican interests."

Statistics cited by the emerging anti-Nafta coalition, report that corn production in Mexico actually increased from 18.2 million tons in 1994 to 21.6 million tons in 2004, but that the modest jump in production wasn't enough to cover the national demand for 27.2 million tons in 2004. Consequently, corn imports rose from 2.2 million tons in 1994 to 5.5 million tons in 2004. Nafta's boosters argued that trade liberalization would benefit consumers, but according to a study by Mexico's Workers University, the price of tortillas-a Mexican staple-shot up almost 7 times from December 1994 to February 2006, while the average minimum wage only increased from 15.2 pesos per-day in 1994 to 48.6 pesos (less than five dollars) per-day in 2006.

Renewed anti-Nafta sentiment in the Mexican countryside could result in the third wave of protests against the trade agreement. Led by the Democratic Farmers Front of Chihuahua and other organizations, many Mexican rural producers staged unsuccessful protests during the early 1990s against the signing of the Nafta. Later, during 2002-2003, many groups retook the anti-Nafta banner under the umbrella of the massive The Countryside Can't Take It Anymore movement. The later protests subsided after some of the participating organizations reached agreements with the Fox Administration for new rural support programs, and because of internal disagreements over the direction of the movement.

The Fox Administration, meanwhile, remains steadfast in its posture of not reopening the Nafta during its last months in office. In remarks this week, Mexican Economy Minister Sergio Garcia de Alba said revising the Nafta would open a Pandora's Box with the United States and Canada of "20 other (agricultural ) issues" unnamed US and Canadian officials threaten to put back on the table if the corn, bean and powdered milk sections of the trade agreement are revisited by Mexico.

Contending there is really no foreign competition over white corn, Garcia de Alba disputed declarations that yellow corn imports threaten national food self-sufficiency. Regarding beans, Garcia de Alba blamed drought for production downfalls in some regions. Mexican economy minister said it was important to concentrate on developing the rural economy, but that growing corn, wheat and sorghum wasn't appropriate in all geograhic and climatic zones.

Sources: La Jornada , June 20 and 22, 2006. Articles by Gabriel Leon Zaragoza and Miriam Posada Garcia. enlineadirecta.info, June 20, 2006. Article by Jesus Hernandez Garcia.

Labor Conflicts Deepen as General Strike Looms

Contributing to a charged national political climate in Mexico, tension continues to pervade labor conflicts in the border states of Sonora and Coahuila. In Sonora, members of the National Mineworkers Union led by Napoleon Gomez Urrutia maintain strikes at mines owned by Grupo Mexico in Nacozari and Agua Prieta. The transnational company canceled its contract with the union earlier this month, sparking fears that police action against strikers is imminent.

In Nacozari, strikers charge that army patrols and plainclothes Sonora state policemen are intimidating miners and their families. "We aren't about machetes," said one unidentified striker, "but we have a surprise for them if they come." Nacozari's copper miners, who earn about $65 dollars per week, also accuse Grupo Mexico and the government of forcing schools and clinics to curb educational and medical services for miners' families.

Jose Luis Castillo Jimenez, director of the Mexican Social Security Institute clinic in Nacozari, denied that his superiors or Grupo Mexico have ordered services curtailed, but admitted that the federal health agency wasn't serving miners. Castillo said the decision was an "administrative question" that came from above.

Approaching three months in duration, the Sonora strikes are part of a national conflict that pits followers of Napoleon Gomez Urrutia against a rival union leadership legally recognized by the federal government. This week, pro and anti-Gomez factions clashed in Moncolva, Coahuila, and Taxco, Guerrero, resulting in several injuries. The strike also affects steel works in the important Pacific port of Lazaro Cardenas, Michoacan, where economic activity has reportedly plummeted 50 percent since the strike began last April.

A police action against strikers in Lazaro Cardenas earlier this year left two strikers dead.

Some representativesof Mexico's business community are calling on the federal government to crack down on what they consider an illegal strike and use force if necessary to bring it to an end. Tomas Natividad, the president of the labor commission of the Mexican Employers Confederation, contends that the the strike demonstrates the weakness of the federal government, a state of affairs that is encouraging unnamed foreign investors to put on hold their projects and contemplate withdrawing investments from Mexico.

On the other hand, labor movement leaders are stepping up pressure on the Fox Administration to back down from its confrontation with Gomez, who is a fugitive charged with embezzling union funds. Gomez's supporters contend the legal accusations are a maneuver to divert attention away from the Pasta de Conchos coal mine disaster in Coahuila last February that left 66 miners dead at the Grupo Mexico-owned facility.

Demanding that the federal government keep its hands off the labor movement, at least 200 unions and labor associations are preparing a general strike set for June 28. If successful, the work stoppage will be Mexico's biggest national labor protest in recent memory.

While strikes are nothing new in Mexico, the scope and timing of the spreading labor strife, sizzling just days before a presidential election, is highly unusual. In a separate struggle that also has national ramifications, thousands of teachers in Oaxaca state reoccupied the downtown of the state capital after they were violently evicted by state and local police in an action that this week that resulted in scores of people injured, including police and civilians.

Added to their demands of better salaries for educators and educational conditions for students, the strikers now demand the resignation of Oaxaca Governor Ulises Ruiz of the Institutional Revolutionary Party. This week's street battle in Oaxaca City prompted solidarity actions by teachers in Zacatecas, Mexico City, Michoacan and Guerrero. Observers say the Oaxaca teachers' strike could complicate the July 2 federal election in the southern state.

"The climate of violence and police repression will generate violent outbreaks in the days before, during and after the July 2 elections," warned Juan Manuel Macedo Negrete, a national teachers' union leader in Michoacan.

Sources: CNN en Español, June 15 and 16, 2006. La Jornada, June 15, 2006. Articles by Octavo Velez Ascensio, Enrique Mendez and editorial staff. Proceso/Apro, June 14, 2006. Article by Arturo Rodriguez Garcia. El Financiero, June 14, 2006. Articles by Isabel Becerril, Guadalupe Cadena and editorial staff. Norte/Agencia Reforma, June 11, 2006. Articles by Haydee Ramirez. cambiosonora.com, June 10, 2006. Article by Jesus A. Ibarra.

Border Controls Stir Business, Political Leaders

Dependent on cross-border tourism, a growing number of business and political leaders in the Mexico-US border region are worrying about the economic impact of pending US border security controls. One concern is over the Bush Administration's Western Hemisphere Travel Initiative (WHTI) scheduled for a two-phase implementation beginning on December 31, 2006. The measure will require US citizens returning from Mexico to present a passport or other accepted document. Until now, US citizens have typically shown driver's licenses or simply stated American citizen" to officials at border crossings.

In Coahuila state bordering Texas , business leaders worry that the new identification requirements will discourage some US citizens from crossing over to the Mexican side to shop, eat and have fun. Citing the high costs new passports could entail for large families, Evaristo Lenin Perez Rivera, the mayor of Ciudad Acuna, Coahuila, said the business community is "very worried" that cross-border tourism will take a plunge. Mayor Perez pointed to the May Day boycott staged by immigrant workers and their supporters as an example of how local border economies are fused. According to Mayor Perez, businesses in neighboring Del Rio , Texas , saw a drop in sales of about $300,000 dollars, while more than half of the 5,000 vehicles that normally travel to the US side did not cross on May 1.

Efrain Valdez, the new mayor of Del Rio , is likewise worried about how the future passport requirements will impact the border zone. "I don't like this measure. I think it could be that the authorities don't live on this border where things are very different," Mayor Valdez said. "Another thing is that they've never asked us our opinion and don't know how this could affect tourism along the border."

Made up of representatives from Mexico and the United States , the Border Trade Alliance (BTA) has scheduled a June 14 meeting in Del Rio to discuss the WHTI. "We clearly support the efforts of our government to protect our borders from those that intend to harm us," said Pete Sepulveda, the president of the BTA's board of directors, "but at the same time we should be on guard to assure that the implementation of new rules doesn't cause excessive damage to our border regions and economy." The June 14 meeting is expected to discuss a US Senate amendment approved last month that requested a 17-month delay in implementing the passport travel requirement.

Like their Mexican counterparts, business and political leaders in Canada are voicing alarm about possible, negative economic impacts of new US travel requirements, especially since very few US citizens hold passports. At a Montreal meeting held on Saturday, June 3, the Federation of Canadian Municipalities passed a resolution outlining the group's concerns about the WHTI.

In Anahuac, Nuevo Leon , a town also bordering Texas , Mayor Mucio Mauricio Gallegos, contended that the deployment of National Guard troops could intimidate some people from
traveling back and forth across the border. As in other US border states , the National Guard in Texas is expected to play a primarily administrative and logistical support role in border law enforcement strategies.

According to Mayor Gallegos, about 15 percent of Anahuac's people currently work in the United States- legally or otherwise. "When (migrant workers) return on weekends, they pump life into everything," Mayor Gallegos said. "That's when businesses make money, when the restaurants are full and when people are out on the streets. Every weekend, there are dances, barbeques and happiness in the town."

Sources: zocalo.com.mx, June 4, 2006. Article by Hervey Sifuentes Del Rio . Canoe-CNews, June 3, 2006. El Universal, May 31 and June 1, 2006. Articles by Juan Cedillo and Hilda
Fernandez Valverde.

Mexico 's May Day: The Convergence of Labor, Electoral and Migrant Issues.

In a preview of widespread protests expected to be convened this May Day against the Fox Administration's labor policies, unions in the northern border city of Matamoros and other parts of Tamaulipas state staged brief work stoppages on Friday, April 28. Organized by the National Mineworkers Union and allied groups, the protesting workers reiterated their demands that Labor Minister Francisco Salazar Saenz step down and union autonomy be respected. Many unions now threaten a national general strike if Salazar is not removed from office. They also demand that fugitive National Mineworkers Union President Napoleon Gomez, who was removed from office earlier this year amid intra-union rivalries and a corruption investigation by the Federal Office of the Attorney General ( PGR ), be recognized as the genuine head of the miners' union.

"This was an act of protest based on an agreement of the National Front for Unity and Union Autonomy, and against the injustices of the federal government and the labor minister who are interfering in issues that are the responsibility of (union members)," charged Arturo Ortega Mireles, the secretary-general for the telephone workers' union in the Matamoros region.

The Matamoros labor stoppage was but one action in a wave of protests throughout Mexico that affected perhaps 5 million people on April 28. Featuring work stoppages, marches and pickets that lasted from one to several hours, protests occurred in Coahuila , Queretaro , Hidalgo , Michoacan, Guerrero , Puebla , Tlaxcala , Campeche , and Yucatan states, among others. In Mexico City , thousands of union members brought traffic to a halt in the capital's downtown for much of the day. Telephone company offices, Mexican Social Security Institute sites, swank tourist hotels, textile plants, and university campuses were among many workplaces temporarily hit by work stoppages. In response to the labor protests, presidential spokesman Ruben Aguilar once again denied the Fox Administration was violating union autonomy.

VIOLENCE AND THREATS OF MORE VIOLENCE

Mexico's widening state-union labor conflict, which snowballed after last February's fatal explosion at a Grupo Mexico-owned coal mine in Coahuila state killed 65 workers and turned into a power struggle between the Fox Administration and National Mineworkers Union President Napoleon Gomez, took a plunge for the worse on April 20 when two union members were killed and more than 40 injured by police during a violent clash in the Pacific port city of Lazaro Cardenas in Michoacan state. Thirty vehicles and a building were torched in the heat of a battle that involved hundreds of workers and police.

Pouring ample fuel onto the national political fire, the Lazaro Cardenas incident embarrassed Michoacan Governor Batel Cardenas, a prominent member of Andres Manuel Lopez Obrador's Party of the Democratic Revolution (PRD). Governor Cardenas, the son of legendary opposition politician Cuahtemoc Cardenas, denied approving the repression and ordered the state human rights commission to investigate

Press accounts report that the police eviction of workers who had occupied a Sicartsa steel plant was planned and carried out by several Michocan state and federal security agencies, including Michoacan's Special Operations Group (GOE), the Federal Preventive Police, Mexican Navy, and Cisen , Mexico 's version of the CIA . A video shown on the Internet site of Mexico 's El Universal newspaper last week revealed shots being fired from a police helicopter during the pitched battle between workers and law enforcement officers.

The Michoacan state leaders of President Fox's National Action Party (PAN) and the Business Coordinating Council supported the police action as an appropriate response to a strike that had been declared illegal by the federal government. Coordinating Council President Ricardo Rubi labeled the workers' posture "violent and senseless." In initial statements following the Lazaro Cardenas confrontation, Fox Administration spokesman Ruben Aguilar blamed the violence on old-style union practices of "extorting" favors and defending corrupt leaders who have "no place" in Mexico 's new political system.

On the other side of the political spectrum, the Michocan state committee of the Popular Democratic Revolutionary Party together with the zonal command of the long-dormant Popular Revolutionary Army ( EPR ) issued a communique that denounced the government, private sector and some union leaders for acting in one way or another against workers' interests. The clandestine group threatened to resume its tactic of "armed self-defense" if responsible police forces aren't fired and punished, the GOE dissolved and the Federal Preventive Police withdrawn from Michoacan.

Federal Attorney General Daniel Cabeza de Vaca absolved federal elements of any responsibility for the Lazaro Cardenas violence in a statement last week, but investigations continue at the state level. Quickly after the April 20 incident, the Michoacan state head of public security, Gabriel Mendoza Jimenez, and the director of the Michoacan Ministerial Police, Jaime Liera, were out of their jobs, with Liera and 3 other Michoacan state police officers charged with criminal violations in the Lazaro Cardenas confrontation.

The high-profile head rollings, coupled with Governor Cardenas's denial of culpability in the Lazaro Cardenas matter, raise new questions about who is in control of public security in Michoacan, especially given the frequent episodes of narco-violence that often involve police. A broader public security crisis was highlighted again on Sunday, April 30, when two heavily-armed bands of still-unknown origin shot it out with AK-47 rifles and grenades in the Michoacan municipality of Tepalcatec . As many as 15 trucks carrying gunmen reportedly were involved in a fire-fight that left at least one man dead and another injured.

Meantime, tensions persist in the mining districts of the border and northern states of Sonora , Coahuila and Zacatecas. The day after the Lazaro Cardenas showdown, a violent row between pro and anti-Gomez union members was reported in Fresnillo, Zacatecas, resulting in a serious injury to mine workers' union member Miguel Angel Porras Coronado.

Stand-offs between police and the Mexican army on one side, and union members on the other, are reported both in Moncolva, Coahuila, and Nacazori, Sonora, where local mine workers' union leader Indalecio Perez Morones was ordered jailed on April 13 and arrest warrants were issued for 29 other unionists on charges related to a strike called against a Grupo Mexico facility last month. Urging conciliation in the ongoing labor dispute, Coahuila Governor Humberto Moreira called on the federal government to avoid another Lazaro Cardenas. Gov. Moreira, a leading member of the Institutional Party of the Revolution (PRI), added the conflict between the union and Fox Administration has "spun out of control."

THE POLITICIZATION OF MEXICO 'S LABOR MOVEMENT

The April 28 work stoppages involved the CROC, CROM, SME UNT , STUNAM, SNTE, CETEG, and other labor federations and unions-organizations generally close to the PRI or PRD political parties. Contributing their support were thousands of Michoacan students who marched in support of the Lazaro Cardenas workers. Voices in support of the immigrant legalization movement in the United States rang out loud and clear on April 28.

"(April 28) is a sample of what will happen on May 1," said Francisco Hernandez Juarez, the leader of the national telephone workers' union. "(It) was an historic day in many respects. Never, probably since the Revolution, had an action of such magnitude been realized," Hernandez contended. Juarez and other opposition union leaders plan a massive counter-march to Monday's official May Day Parade in Mexico City that is being organized by union leaders who will meet later in the day with President Vicente Fox.

In an unprecedented fashion, important sections of the labor movement are moving beyond narrow workplace issues, as well as the immediate Salazar/Gomez confrontation, to incorporate other demands, including reductions in energy prices and support for the so-called Great American Boycott organized for May 1 by immigrant rights' organizations in the United States . Unions in the Sonoran border city of San Luis Rio Colorado , for instance, plan to make the legalization of undocumented workers in the US one of their big themes in this year's traditional May Day parade. Pro-migrant sentiment that is manifested during the official May Day parades in border cities like San Luis Rio Colorado and Nuevo Laredo , Tamaulipas, could help swell the ranks of demonstrations in support of the Great American Boycott.

Long subservient to the federal government, sectors of the workers' movement, although in many ways still dominated by figures who were or are close to the former ruling PRI party, are nevertheless on the verge of overturning the pattern of official union-government collaboration that's historically defined labor relations in Mexico.

Even sectors of the Mexican Labor Congress, which has been timid in opposing Fox Administration economic policies, and teachers' union leader Elba Esther Gordillo, who was once considered politically close to Vicente Fox and his wife, are throwing in their lot with the labor opposition.

In a presidential and congressional election year, the new labor movement is fast acquiring a political tone. A common declaration heard April 28 was that the PAN and its presidential candidate, Felipe Calderon, would pay the price on election day for their alleged anti-worker policies.

Sources: El Bravo, April 29, 2006 . Article by Jose Maria Barrientos and Delia Arellano. El Diario de Juarez/El Universal, April 29, 2006 . El Sur, April 29, 2006 . El Universal, April 26, 28 and 30, 2006. Articles by Francisco Gomez, Alejandro Suverza, Jaime Marquez, and the Notimex news agency. Procesco/Apro, April 28 and April 29, 2006 . Articles by Rosalia Vergara, Rosa Santana, Francisco Castellanos J., Jose Palacios Tepate, and Arturo Rodriguez Garcia. La Jornada, April 21, 22 , 23, 24, 29, 30, 2006. Articles by Patricia Munoz, Carolina Gomez, Cristobal Garcia Bernal, Gerardo Flores, Carlos Torres, Daniela Morales, Antonio Aguilera, E. Martinez, and Fabiola Martinez. La Cronica, April 29, 2006 . Article by Juan Jose Razzo. Univision, April 21 and April 28, 2006 . cedema.org, April 22, 2006 . EPR communique. enlineadirecta.com, April 30, 2006 . Article by Gaston Monge.

Latin America Border Series: Remittances Driving Central American Economies

Fair doses of media attention recently have been cast on the role of migrant remittances in the Mexican economy. Statistics reported in a paper authored by a Costa Rica-based researcher suggest remittances are even more economically vital to Central America than they are in Mexico -at least for many families. According to figures compiled by Marije van Lidthe de Jeude, a Dutch anthropologist and independent researcher who has worked with the United Nations and other international organizations, the four Central American nations of El Salvador, Guatemala, Honduras and Nicaragua received a combined $7 billion dollars out of a total of $34 billion dollars in remittances from the United States that entered Latin America just in 2004. The four small countries account for barely 6 percent of Latin America 's total population.

Van Lidthe de Jeude said Central American remittances have grown “exponentially” since 1990, reaching a point in 2003 when migrant dollars constituted 20 percent of the Gross National Product (GNP) of El Salvador and 30 percent of the GNP of Nicaragua. Another important development reported by van Lidthe de Jeude: remittances dominate the legal foreign revenues entering Nicaragua , El Salvador and Guatemala . Not surprisingly, most remittances flow from jobs in the United States , but an undetermined sum comes from in-region migration, especially from Salvadorans working in Guatemala and Nicaraguans laboring away in neighboring Costa Rica

Van Lidthe de Jeude recently spoke about the experience of Nicaraguans in Costa Rica at the international conference on borders sponsored by state universities from New Mexico , Texas and Chihuahua and held in Ciudad Juarez . The Dutch scholar said no firm numbers exist about the number of Nicaraguans living and working in Costa Rica, but one 2005 estimate puts the figure at somewhere between 350,000-450,000 people-about 10 percent of Costa Rica's total population. More than 50 percent of the migrants are women, a trend also evident in Guatemala where 63 percent of all Salvadoran migrants are female.

According to van Lidthe de Jeude, Nicaraguan emigration to Costa Rica picked up during the Sandinista revolution and civil war of 1979 to 1990, but continued afterward for “pure economic reason.” Today Nicaraguan labor fills jobs in the agricultural, domestic services, construction, and private security sectors. Like their Mexican counterparts, Nicaraguans send money home that is spent on educational, housing and other ordinary expenses.

Like Mexicans in the United States , Nicaraguans in Costa Rica increasingly constitute the majority of faces on certain job sites.

For instance, Costa Rica 's prime export, coffee, “can't be harvested without the help of Nicaraguans,” van Lidthe de Jeude maintained. Once picked by students given time off from school, the coffee bean is now harvested by Nicaraguan seasonal workers.

Documented or not, Nicaraguans are even landing jobs as private security guards. “Most of those jobs are filled by Nicaraguans,” van Lidthe de Jeude said. “It's also interesting to note that apparently in Costa Rica there are more houses with fences and private security walking on the streets guarding houses or streets than in many cities in Colombia, for example,” she added.

In her remittance paper, van Lidthe de Jeude cites other Central American studies that, like Mexico, assess remittances as carrying importance for local and family economies but still lacking broader, positive economic development impacts. Quoted by van Lidthe de Jeude, one study contends that remittances not only achieve transfers of wealth, but deepen economic dependence as well, contributing to “the strengthening of inequalities between developed countries and (nations) on the path of development.”

Kent Paterson

A Deck of Chinese Cards

Mexican and US officials and businessmen are stepping up contacts with China and other Asian nations in high-stakes bids to expand economic relations. Trade missions from Baja California , Chihuahua , Michoacan and Texas all have recently flown to meetings and tours in the emerging global economic powerhouses of the Far East .

Headed by Chihuahua Governor Jose Reyes Baeza, a state delegation of cabinet members, elected officials and university leaders journeyed to China late last month to strike new business, industrial and tourist agreements. Prior to the trip, Alejandro Cano Richaud, Chihuahua state secretary for industrial development, said Chihuahua representatives were interested in examining the Shanghai free trade zone, and exploring the possibility of having Chinese manufactured products finished in Ciudad Juarez before exporting them to the United States. "We don't see China as a competitor, but as an ally," Cano said.

As a result of the trip, Chihuahua officials signed several academic, research and business development accords, including pledges to increase language-learning exchanges between Chinese and Mexican students. In an almost simultaneous Asian tour, Baja California Governor Eugenio Elorduy Walther led a group of businessmen and state officials to China and South Korea for a round of deal-making on investment and tourism. China has recently emerged as a hot, new source of tourists visiting Mexico. Gov.Walther announced that an unnamed South Korean company agreed to invest $40 million dollars in a new Baja California factory dedicated to the production of televisions and computers. The plant is expected to employ about 1,200 workers.

Not missing out on the trade tour circuit, members of the Free Trade Alliance from San Antonio, Texas, and officials from Lazaro Cardenas, Michoacan, planned a joint China trip this week to promote promote their emerging trade mega-corridor stretching from the Pacific to the US Midwest via the Kansas City Southern Railroad. In San Antonio , the old Kelly Air Force Base has been transformed into a transportation intermodal to handle the anticipated upsurge in trade-driven traffic.

Geared up for a massive influx of Chinese imports, the port of Lazaro Cardenas is undergoing a $200 million-dollar container ship facility uplift paid for by Hutchison Port Holdings. Hector Carranza, the port's business director, said the Michoacan coastal city is poised for expanded action. "We are ready. The port is ready," Carranza insisted. Given Lazaro Cardenas' new strategic importance, Mexican officials have reacted sharply to recent labor strife in the port, warning investors could be driven away.

Their eyes fixated on the expanding Chinese star, Mexican officials are now considering opening an eastern-oriented Pacific port in Baja California to help handle the burgeoning trade volume. Located about 150 miles south of the US-Mexico border, Punta Colonet is emerging as a possible super port. Carlos Jauregui, the executive director of the port of Ensenada said construction of the port could begin in 2008 and be completed by 2012. Jauregui estimated the facility could cost about $5 billion dollars to build, including a rail link to the United States .

Sources: El Diario de Juarez, April 1 and 5, 2006. Articles by Gabriel Simental and the Notimex news agency. La Cronica ( Mexicali ), April 2, 2006. Articles by Edgar Lopez and editorial staff. Norte, March 28, 2006. Article by Hugo Hernandez Jauregui. Albuquerque Journal/Associated Press, April 6, 2006.

Grupo Mexico Labor Conflict Deepens

The labor and political crises arising from last February's deadly explosion at a Grupo Mexico-owned coal mine in northern Coahuila state are deepening on all fronts. Labor, political, business and church sectors are involved in a multi-faceted conflict with still unknown consequences for Mexico 's presidential transition year. Fueling much of the discord is the decision of federal Labor Ministry to recognize Elias Morales and not Napoleon Gomez as the legal secretary-general of the National Mineworkers Union following the Coahuila mine disaster. Raising the banner of union autonomy, miners at Grupo Mexico-owned facilities in the northern border state of Sonora have staged work stoppages and protests while other union members have conducted similar job actions in Zacatecas and Michoacan in recent days and weeks.

On March 24, workers at the Grupo Mexico Nacozari de Garcia mine in Sonora carried out a work stoppage in support of deposed union leader Napoleon Gomez and in demand of a new contract. The miners want improved safety conditions, decent equipment and protection from environmental contamination allegedly affecting their families.

Since the work stoppage, miners have taken their movement to the streets of Nacozari. This week the workers blockaded the municipal administration building and banks in protest of alleged federal interference in the management of union funds. "It's not the company's or the government's money,” contended union leader Indalecio Perez Morones. “It's money contributed by the workers, and we need it at the moment,"

On April 1, another union-led work stoppage erupted at a Grupo Mexico subsidiary mine near the Sonora-Arizona border city of Agua Prieta . If their demands are not met, union members vow to garner support from other national and international labor organizations and possibly strike. More than 1,200 workers were involved in the Nacozari and Agua Prieta actions.

In Moncolva, Coahuila, meanwhile, about 1,500 mineworker union members participated in an April 3 march organized by federal Deputy Ricardo Rodriguez Rocha and led by new union Secretary-General Elias Morales. The marchers demanded that Gomez be held responsible for the alleged pilfering of $55 million dollars earned from the privatization of the Cananea copper mine in Sonora during the administration of Carlos Salinas de Gortari.

Filing through the streets, Gomez opponents chanted " Napo , Napote. We want you in the bote (jail)." Besides the Cananea money, the marchers also demanded five percent of the proceeds from privatization of the Altos Hornos state company in Coahuila. Gomez loyalists briefly clashed with Morales supporters, and plastic bottles and water bags were reportedly tossed but the incident did not escalate. The next day, April 4, Gomez supporters in Coahuila held an election to choose local leaders, but a Morales representative announced the new union leadership would not recognize the vote and instead hold a new round of balloting.

A fugitive, Gomez is currently wanted by the Federal Attorney General's Office on charges stemming from the Cananea sale, but he is still supported by many union members who accuse federal Labor Minister Francisco Salazar of illegally sacking Gomez and replacing him with Morales. Gomez's supporters contend their leader was targeted in order to divert attention away from Grupo Mexico and the Labor Ministry as the responsible parties for the February 19 disaster at the Pasta de Conchos mine in Coahuila that left 65 miners dead.

In March, pro-Gomez union members filed industrial homicide charges with the Coahuila State Attorney General's Office against Labor Minister Salazar and two of his inspectors, Mario Alberto Fraga Zamarron and Jesus Reynaldo Mencacha Medina, who supposedly inspected and approved safety conditions at the Pasta de Conchos facility before the explosion happened.

The Fox Administration-Gomez-Morales conflict is steadily witnessing national repercussions. On April 2, 10,000 National Mine Workers Union members at iron and steel works shops in the south-central Pacific Coast port of Lazaro Cardenas , Michoacan, commenced a work stoppage. They threatened to declare a full strike and seize properties if Gomez is not reinstituted soon. The action polarized local labor-management relations, caused millions of dollars in economic losses and sparked legal charges against union leaders.

Declaring a strike in Lazaro Cardenas illegal, the federal Labor Ministry urged that normal channels be used to resolve the conflict. According to the Labor Ministry, the job action is not only illegal and destructive to the economy of the Michoacan but affects the country as a whole. "(The work stoppage) is an attack against the patrimony of many Mexicans, and in an irresponsible way erodes the image of Mexico abroad and drives investment from the national territory," claimed the Labor Ministry in a communique.

Labor Minister Salazar, meanwhile, faces new political heat over the February Pasta de Conchos tragedy. Allegedly offensive remarks made last month by Salazar about miners supposedly entering their workplaces while high on drugs and intoxicated from alcohol prompted leaders of the Coahuila state congress this week to resolve that Salazar publicly apologize for his comments and testify before the federal congress about both the causes of the Pasta de Conchos disaster and mining industry safety conditions in general. In a gesture of multi-party unity, Representatives from the PRI, PAN, PRD, UDC, PT and PVEM political parties all backed the resolution.

Another actor in the spreading conflict, the Roman Catholic Church, plans on refocusing attention in the coming days on the Pasta de Conchos victims. Former Chiapas Bishop Samuel Ruiz, a well-known human and indigenous rights activist, has joined ranks with Bishop Raul Vera Lopez of Saltillo , Coahuila, to organize a "Caravan for Life" on April 10. The pilgrimage is scheduled to begin in Moncolva during the morning and arrive outside the Pasta de Conchos mine in the municipality of San Juan de Sabinas later in the day. Church and non-governmental organizations are expected to be on hand for prayers and reflections with family members of the 65 dead miners, who have rejected a Grupo Mexico compensation offer of about $75,000 dollars for each deceased miner until the bodies of their loved ones are recovered from underground shafts.

Sources: El Universal, April 4 and 5, 2006. Articles by Hilda Fernandez and the Notimex news agency. El Diario de Sonora, April 4, 2006. Article by Santiago Garcia. zocalo.com.mx, April 4 and 5, 2006. Articles by Alberto Rojas and editorial staff. La Jornada, April 3, 2006. Article by Patricia Munoz Rios. El Imparcial/SUN, April 3, 2006. Proceso/Apro, March 17 and April 4, 2006. Articles by Rosalia Vergara and editorial staff.

Automotive Safety Parts Factory Hit by Explosions

Still grappling with the deadly explosion that killed 65 miners last February, the northern border state of Coahuila was shaken by a series of new blasts on the evening of March 30. This time gas explosions rocked the Takata automotive parts plant located in Ciudad Frontera, south of the Pasta de Conchos mine where miners earlier perished in an explosion blamed on a build-up of methane gas. In the latest incident, gas leaks in equipment used by the Ciudad Frontera maquiladora were blamed by the Coahuila Civil Protection Department for the explosions. No deaths were reported, but at least 7 injuries were registered by the Mexican Social Security Institute and the Red Cross.

Roberto Enriquez, Takata's human resources manager in Ciudad Frontera, said 600 workers were successfully evacuated from the plant. Upwards of 4,000 residents of surrounding neighborhoods were also forced to leave. The first explosion, followed by a series of at least four other blasts, attracted a crowd of curious onlookers who were soon forced to flee in panic. "It was horrible. We didn't think we would escape with our lives," said Ciudad Frontera resident Fidencio Gonzalez.

Compared to a movie scene by one reporter, the last explosion produced a fireball. Police, army, fire and civil protection units all arrived to cordon off the scene, and firefighters spent three hours battling a fire before it was extinguished. The explosions destroyed the factory and damaged more than 500 homes, businesses and public buildings, including a command and control center of the Coahuila State Public Security Ministry, in about a three-mile radius. Monetary losses were estimated in the millions. Accompanied by Takata executive Dan Luk, Coahuila Governor Humberto Moreira Valdes announced the company will compensate property owners and continue paying workers' salaries during the rebuilding of the maquildadora.

The explosion came on the heels of a two-hour plant evacuation on March 29 after gas leaks were reported. Nonetheless, work at the factory had resumed when the disaster happened the next day. Similar to the Pasta de Conchos mine situation, the Takata plant was reportedly inspected by the federal Labor Ministry some months prior to the disaster.

Located close to plants run by Tecksid and the Lear Corporation, the Takata factory was built within 150 feet of previously-settled residences. Some Ciudad Frontera residents complained that irregularities characterized the siting of Takata, but Mayor Rogelio Ramos said all the legal authorizations were in order. "We will analyze if it is necessary to change (the plant's location)," Mayor Ramos added.

A Japanese-owned company, Takata manufactures air bags, safety belts and other automotive safety devices. Posting more than $4 billion dollars in 2005 global sales, Takata's main clients include GM, Ford, Nissan, Toyota , and Daimler/Chrysler. The Ciudad Frontera plant employed about 2,600 personnel prior to its fiery destruction.

Sources: El Universal/Notimex April 1, 2006. Proceso/Apro, April 1, 2006. zocalo.com.mx. March 31 and April 1, 2006. Articles by Juan Ramon Garza, Erik Alba, Eduardo Rios, Roberto Ortiz, and editorial staff. takata.com

A Political Fallout Rains from the Coahuila Mine Disaster

The explosion that killed 65 miners in the border state of Coahuila last month is sending fallout far and wide. Bursting open a new political can of worms, the coal mine disaster is setting loose labor-management conflicts, heightening government-union conflicts, firing up intra-union rivalries, and exposing possible corruption in all the institutions entrusted with safeguarding the lives of miners and the well-being of their families.

On March 1, about 270,000 members of Mexico 's National Mineworkers Union launched work stoppages in several states in protest of an attempt by the federal Labor Ministry to remove Napoleon Gomez Urrutia as secretary-general of the miners' union. The national action was primarily aimed at facilities operated by Grupo Mexico , the owner of the Pasta de Conchos mine in Coahuila where the 65 coal miners died. Safety grievances and the lack of equipment at other company mines were also raised as justifications for the mass worker protests. Erupting during an already turbulent federal election year, a prolonged labor dispute in the mining industry is bound to have unforeseen political repercussions.

In the northern state of Sonora bordering Arizona , copper and other miners quit work at facilities in Cananea, Nacazori and Agua Prieta. Francisco Javier Salazar, a union member in Cananea, accused Grupo Mexico and the Fox Administration of trying to divert attention away from government and corporate responsibility for occupational health and safety hazards in the mining industry by placing the blame on Gomez for miners' problems. On February 28, the Labor Ministry headed by Francisco Javier Salazar Saenz approved a long-time Gomez opponent, Elias Morales Hernandez, as the "provisional," legal head of the union.

Finally acting years after a legal challenge was first pursued by Morales against Gomez for the union's top leadership post, the timing of the Labor Ministry's decision fell under immediate suspicion. Morales was once considered the "right-hand man" of Gomez's father, Napoleon Gomez Sada, who ran the union for decades prior to his death. Morales and the younger Gomez then fought over succession of the union leadership, with Gomez's supporters maintaining their man was legally elected union president in a 2002 assembly. Pro-Gomez union members label Morales a tool of Grupo Mexico , a tag Morales denies. Although he is not in control of the union's headquarters in Mexico City , Morales declared the union's national committee under Gomez was dissolved. Morales was backed up the head of Mexico 's Labor Congress, railroad union leader Victor Morales, who himself is under fire from retired railroad workers for allegedly stiffing them for their pensions.

Elias Morales said this week he will press the Federal Attorney General's Office to pursue legal charges against Gomez for illegally occupying the union's headquarters. The claimant to the mine workers' union top post is also demanding that federal legal authorities investigate an alleged misappropriation by Gomez of a multi-million dollar trust fund set up for miners after the privatization of mines in the 1980s.

The dramatic challenge to Gomez and subsequent miners' strike followed days of mounting accusations of official malfeasance in the deaths of the Coahuila miners. A December 2005 report from the Labor Ministry noted that better monitoring of gas levels in the Pasta de Conchos mine was needed. Two weeks before the disaster the mine passed a safety inspection, but several miners were later quoted in the press as saying there were dangerous levels of methane gas in the mine just before the deadly February 19 explosion. Urging an investigation of the Labor Ministry, Coahuila Governor Humberto Moreira charged that two federal inspectors responsible for the Pasta de Conchos mine were bought off with "girls, liquor and money" before the disaster happened.

In recent days, angry family members confronted both union leader Gomez and government representatives, accusing the officials of forcing the doomed miners to work in deadly conditions. Already balancing numerous scandals on its agenda, the Mexican Congress is now stepping in to hear government testimonies and conduct its own investigations of the Coahuila disaster. And like many other scandals in Mexico , the Pasta de Conchos disaster is now an international issue.

Mexico 's National Union of Highway and Bridge workers filed a complaint with the International Labor Organization (ILO) this week that charged the Fox Administration with not taking the adequate steps that could have avoided the catastrophe. Martin Curiel, the secretary-general of the union, said the purpose of the ILO complaint is to urgently correct “omissions”of international labor agreements signed by the Mexican government. The complaint was supported by Raul Vera, the Roman Catholic bishop of Saltillo , Coahuila, and several human rights and labor groups.

Meantime, family members express sorrow, outrage and a sense of betrayal. Reports that it may take weeks or months, if ever, before the miners' bodies are recovered, only enhanced the anguish. Besides educational scholarships and other forms of support, Grupo Mexico is offering miners' survivors between $75,000 and $100,000 dollars in compensation for their dead relatives. The dead miners left behind 162 children.

Javier Rojas, a Catholic priest advising families, is cautioning survivors against signing any agreement before all legal remedies all carefully examined. Reportedly, 54 of the 65 affected families have rejected any compensation until responsibilities for the tragic deaths of their loved ones are clarified. Interviewed on television, Leticia Carrillo, the wife of a killed miner, said she was confused by the company's offers and called on President Fox to come to the scene. Another family survivor who erected an altar outside the mine simply said, "My tears aren't going to end."

Sources: Nuevo Dia ( Nogales ), March 1, 2006. Lacronica (San Luis Rio Colorado ), March 1, 2006. Article by Zorayda Gallegos. El Universal, March 1 and 2, 2006. Articles by Julian Sanchez, Hilda Fernandez Valverde, Jorge Octavio Ochoa, and the Notimex and EFE news agencies. La Jornada, March 1 and 2, 2006. Articles by Patricia Munoz Rios and regional correspondents. Proceso/Apro, March 1, 2006. Article by Arturo Rodriguez Garcia. Univision, February 28 and March 1, 2006.

The Historic Lot of Coahuila's Miners

In a nation dazed by mounting political scandals, the fate of 65 trapped Mexican coal miners has refocused attention on basic human issues of suffering and solidarity. The tragedy began early on Sunday, February 19, when a suspected gas explosion hit a coal mine in San Juan de Sabinas, a town situated about 85 miles southwest of Eagle Pass , Texas , in the northern border state of Coahuila. Twelve injured miners were rescued but 65 of their comrades were trapped more than one mile below ground.

Filled with anguish and anger, distraught relatives of the workers soon gathered outside the mine to pray and await word of their loved ones. "I ask god to help those who are below as well the family members here," said Anita Reyes, a relative of a trapped miner.

The coal miners labored at the Pasta de Conchos facility run by the Mexican Industrial Mining company, a subsidiary of the large Grupo Mexico corporation. One of the largest mineral industry companies in the world, the Mexico City-based Grupo Mexico also owns the shut-down Asarco copper smelter in El Paso , Texas . The Pasta de Conchos mine reportedly employed 296 workers at the time of the February 19 disaster.

Already swamped by a stubborn wild fire elsewhere in Coahuila, the Coahuila state government's civil protection department dispatched personnel to San Juan de Sabinas to lead rescue efforts assisted by the Mexican army and firefighters. Notified of the emergency, Coahuila Governor Humberto Moreira Valdes quickly arrived to the scene. Recovery efforts, however, were hampered by dangers posed to rescuers from possible poisonous gases and structural collapses.

"It's difficult to advance rapidly," acknowledged Sergio Robles, the chief of Coahuila Civil Protection. On February 21, the federal Ministry of Interior took over rescue coordination efforts, while mine disaster experts from West Virginia were reported on their way to San Juan de Sabinas.

Government authorities and Grupo Mexico personnel did not initially confirm the exact cause of the accident. However, suspicions fell on a possible build-up of methane gas. Juan Rebolledo, the vice-president of Grupo Mexico , said the company followed all national and international norms of mine safety, and passed an inspection carried out by Mexico 's federal Labor Ministry in early February. Rebolledo's position was backed up by the Labor Ministry and Luis Chavez, the general director of the mine department of Coahuila's Ministry of Economic Promotion, who rated the Pasta de Conchos mine as technologically advanced and "one of the safest."

On the other hand, some ex-miners and relatives of current miners contended that dangerous gas build-ups existed at the mine just prior to the accident. One unidentified mother of a trapped miner said her son had informed her about unsafe working conditions but couldn't officially denounce them because he was threatened with losing his job.

"I worked here five years and there was a lot of gas, "added Zacarias Cruz, a former miner. "It was a time bomb."

The miners were employed by Grupo Mexico and the General Company of Hullua, a Grupo Mexico contractor. Many did not receive benefits, and some workers reportedly earned as little as $5.50 per day. National Mine Workers Union Secretary General Napoleon Gomez said only 25 of the 65 trapped miners belonged to the union.

Gomez charged that miners' safety is frequently sacrificed for profits. "The companies are more interested in production, the market and prices," Gomez contended. "They neglect safety conditions, which provokes tragedies like the one that just happened."

Despite the occupational hazards of coal mining, hospitalized worker Fermin Rosales said the work was all he had to support his family. "It's a necessity," Rosales said. "As a parent, one has to get the family ahead,"

The Pasta de Conchos tragedy is not unique in the history of northern Coahuila's coal mining region, where about 5,000 miners are employed. Since 1902, 23 explosions have rocked mines in the area. The biggest loss of life happened in 1969, when 164 miners were killed in Barroteran. Twenty-five miners have perished in accidents since September 2001.

Governor Moreira, union leader Gomez and the federal Chamber of Deputies have all called for an investigation of the Pasta de Conchos disaster. As the days wore on, desperation about the fate of trapped miners grew. In the Coahuila border city of Ciudad Acuña , the Guadalupe and San Jose churches collected supplies for the vigil of miners' relatives. Urging mine owners to pay special attention to safety, Roman Catholic Bishop Alonso Garza Treviño of the Diocese of Piedras Negras added that tragedies like the one in San Juan de Sabinas should not "be possible" in the 21st century.

Sources: CNN en Espanol, February 19, 20, 21 and 22, 2006. La Jornada , February 20 and 21, 2006. Articles by Leopoldo Ramos and Patricia Muñoz Rios. zocalo.com.mx, February 20 and 21, 2006. Articles by Orquidea Lopez Allec, Sandra Cisneros and Enrique Gonzalez Correa. El Universal, February 21, 2006. Articles by Jorge Herrera and the Notimex news agency. Proceso/Apro, February 21, 2006. El Financiero, February 20, 2006. TV Azteca, February 20, 2006. Laredo Morning Times/AP, February 20, 2006. Article by Juan Montaño and Ioan Grillo.

Border City Scores Cell Phone Plant

The Tamaulipas border city of Reynosa will be hosting new jobs soon. The Finnish-owned mobile phone parts manufacturer Perlos Oyj recently announced the company plans to lay off 1,250 workers at its Fort Worth , Texas , plant and move the jobs the Reynosa . The announcement ended Perlos' 11-year production history in the United States . In 1995, Perlos opened the Fort Worth factory where it manufactured parts for the Nokia Corporation. The plant was the only production facility Perlos operated in the United States .

Unnamed Perlos officials said the lay-offs should be completed by June. A press statement released by the company cited red ink as playing a role in the plant relocation decision. According to Perlos officials, the company could save $18 million dollars annually from moving production to Mexico . The Perlos lay-offs join a list of other, recent mass lay-offs in the United States . The high-tech company Oracle, for instance, recently declared it was laying off 2,000 workers at its California Bay Area operations. Earlier, Ford Motor Company announced job cuts in the tens of thousands.

Located across the Rio Grande from McAllen , Texas , Reynosa has witnessed new growth in the industrial sector during the last two years, though the neighboring states of Coahuila and Nuevo Leon have seen more openings of assembly-for-export factories known as maquiladoras. Last year, three new maquiladoras opened their doors in Reynosa .

Already growing rapidly from a combination of cross-border manufacturing growth, real estate sales and small business development, the economy of McAllen could further benefit from the Perlos relocation. Mexican nationals from Reynosa and Monterrey , Nuevo Leon , are credited by officials from both sides of the border for boosting McAllen 's economic performance. McAllen Mayor Richard Cortez recently said 36.9 cents of every dollar spent in his city's commercial establishments comes from residents of Reynosa or Monterrey . According to Reynosa Mayor Francisco Cabeza de Vaca, pedestrian traffic between Reynosa and McAllen is up 40 percent in the last 12 months.

Camilo Martinez Cortez, the director of the Reynosa branch of the National Chamber of Commerce, Services and Tourism, estimated that 80 percent of the homes valued above $200,000 dollars in the Rio Grande Valley near McAllen are owned by Mexicans, while 52 percent of McAllen 's bank assets are held by Mexicans. Martinez said Mexicans contribute "a considerable quantity" to McAllen´s economic numbers.

Sources: El Manana ( Nuevo Laredo ), February 13, 2006. Article by Carlos Vertti. El Manana ( Reynosa ), Februar y 13, 2006. El Diario de Juarez/Notimex, February 11, 2006. newsday.com/AP, February 9, 2006.

Chihuahua News : Water Payment Debts Spark Occupation

Angry over alleged late payments for selling their water rights, hundreds of farmers occupied on Monday, December 5, the Chihuahua City offices of Mexico's federal agricultural ministry, Sagarpa. Led by Roberto Cazares, a Chihuahua state deputy representing the PRD party and a leader in the El Barzon movement, the farmers demanded back-payments totaling nearly $20 million dollars supposedly owed to them by the federal government. Cazares said about 600 small farmers from Irrigation District 05, which encompasses the Delicias, Meoqui and Rosales region south of Chihuahua City, are still waiting for federal payments one year after enrolling in the Water Rights Acquisition Program (Padua).

Established to relieve water supply pressures in drought-stricken zones, the program promises payments of approximately $3,000 dollars per-hectare to producers who retire their land from production. According to Cazares, about 7,000 acres of land have been withdrawn from planting in Irrigation District 05, reducing irrigation draws from two local reservoirs and deep wells. The water sources form part of the Rio Conchos Basin, which is the key provider of water flows to the Rio Grande/Rio Bravo managed under an international agreement between Mexico and the United States. Mexico recently paid off a long-standing water debt with the United States that it had racked up under the terms of the treaty.

Chihuahua farmers affiliated with the Padua program earlier met with Francisco Lopez, a Sagarpa assistant secretary, who reportedly told the growers that payments were late because of emergency financial needs stemming from Hurricane Stan. Lopez reportedly pledged to the farmers that they would be paid on November 30. When no money appeared by the end of November, the Chihuahua growers decided to protest.

Carlos Aguilar Camargo, the Sagarpa delegate in Chihuahua City, responded negatively to the occupation of his offices, initially telling the farmers he would not be pressured into negotiating. Later on, however, Camargo met with the occupiers and told them a solution to their problem will have to come from authorities in Mexico City. Protest leader Cazares said the farmers would continue the sit-in until their grievances are resolved.

Sources: lapolaka.com, December 5, 2005. La Jornada, December 6, 2005. Article by Miroslava Breach.

A Credit Card Explosion Hits Mexico

Just in time for Santa Claus, Master Card and Visa are on special display on the border and in Mexico . Taking a cue from US marketers, Mexican banks are massively courting new credit card holders. To lure new customers, they are offering, among other entincements, interest-free payment plans for the Christmas shopping season, free trips and air mileage. For the first time, banks are targeting potential new credit card holders with incomes as low as $700 dollars per month. And if a new credit card owner is not signed up at the bank´s doorway or in the shopping plaza, no matter. Telemarketers are on the move, calling homes with credit card offers.

¨In its search to stay solvent, the Mexican financial system has exploited new market niches, expanding its client list to those who have precarious levels of income,¨said Professor Pedro Flores, an economics instructor at the Autonomous University of Ciudad Juarez.

A credit card boom is evident in the number of cards currently circulating in Mexico .

The number of credit cards issued in Mexico by mid-2005 was reported to have reached 15 million, a dramatic leap from 1995 to 2001, when Mexican banks only issued 6.3 million cards. Because of high interest rates and scant consumer education, some consumer advocates warn of new debt traps snaring consumers and undermining family incomes. A survey of 9 major financial institutions operating in Mexico revealed that credit card interest rates range from 16.28 to 29.76 percent.

Jorge del Valle Cosio, the Ciudad Juarez delegate of the National Commission for the Protection and Defense of Financial Services Customers (Condusef), said 70 percent of the complaints are credit card-related. According to del Valle, frequent grievances include unrecognized charges and disputes over interest payments. Another problem still confronting credit card holders is the danger of cloning.

Mexico underwent a similar credit card promotional boom in the early 1990s, primarily aimed at the middle class, but many businesses discontinued accepting plastic money when the 1994-95 economic crisis rocked the nation. Left holding uncollectable debts, Mexican banks were the beneficiary of a costly government bail-out. A report from the World Bank last September estimated the total public cost of the rescue was four times greater than the approximately $33 billion dollars obtained by the Mexican government from the privatization of public enterprises during the 1990s. Once stabilized, the banks were largely sold off to foreigners. Nowadays, an estimated 90 percent of the Mexican banking sector is foreign-controlled.

Back in the credit market, Mexico´s banks have taken added measures to ensure they are paid. ¨Today banks count with information and tools like the credit bureau and statistical methods, as well as experience, which permit financing offers and control of overdue accounts,¨ said Marcos Martinez Gavica, the president of the Association of Banks of Mexico.

Some charge that banks are employing ¨psychological terror¨to intimidate their credit card clients. According to Erick Mogollon, a lawyer specializing in debt cases, late-paying debters are routinely subjected to daily telephone calls warning them to pay up or face penalties.

Indeed, profits from credit card and other interest payments are driving Mexico´s banks, constituting 35.7 percent of the banking sector´s income for 2004. The Latin American Federation of Banks recently rated Mexico as the top country in Latin America for the biggest increase in bank earnings. Steaming ahead, Mexican banks have plans to further popularize the use of plastic money, and are exploring the use of customized financial transaction technologies for small businesses.

¨The Mexican banking system depends on its integration into the global financial system, whose goal is to integrate the greatest number of customers to the electronic payment network which, without doubt, is the biggest revolution in the history of money,¨said Professor Flores, who also pointed to a downside of the credit card revolution. ¨Credit has its pernicious side, since the irresponsible management of this banking instrument tends to complicate the financial stability of individuals and put the system at risk,¨he said.

Plant Relocation Slams Local Economy, Health Care

A manufacturer of jeans and shorts, the Exorptex de Mexico company employed almost 1,800 workers at its factory in the Sonora border city of San Luis Rio Colorado . But last July, the firm began laying off the San Luis work force and moved its operation south to Torreon , Coahuila. The mass lay-off helped slice the San Luis maquiladora labor force from more than 9,000 workers in July to less than 7,500 today. Now, local officials are beginning to calculate the economic and social impact of Exportex's plant closure.

Enrique Orozco Oceguera, the director of the International Industrial Park in San Luis, estimated that the loss of Exportex translated into about $350,000 dollars less each week flowing into the local economy. The loss of water and sewerage fees will deprive the city government of approximately $900,000 dollars in revenue each year, and the municipality also will be without the $50,000 dollars annually that Exportex paid in property taxes.

The health system is another sector impacted by Exportex's move. Both the company and its employees paid taxes that supported the operations of the Mexican Social Security Institute (IMSS), the federal government-run health system that primarily serves low-income workers. IMSS supporters contend the system is chronically underfunded, confronted with recurrent budget crises and an over-demand for existing services. Luis Alfonso Morales Novoa, the IMSS' sub-delegate in San Luis, said the Exportex and smaller maquiladora lay-offs this year in San Luis have reduced revenues in the range of 12-15 percent. "Certainly, the impact was considerable," Morales said.

Source: LaCronica, November 15, 2005. Article by Santiago Barroso Alfaro.

Controversial Energy Projects Unveiled for Mexico 's Southern Border

Weaving an economic development strategy with threads on both his northern and southern borders, Mexican President Vicente Fox continues to push energy as the centerpiece. Focused on George W. Bush, Hugo Chavez and street protests at Free Trade Area of the Americas (FTAA) summit held last week in Mar de Plata, Argentina, most US media missed reporting on a tentative energy deal announced during the South American meeting between Mexico and 9 other Latin American nations. The agreement was reached within the context of the controversial Plan Puebla-Panama.

The agreements we have reached... are going to guarantee in the medium term the supply of energy for the region in competitive conditions that benefit the population and productive projects," President Fox declared in Argentina .

Carrying a price-tag of about $7 billion dollars in private and public investment, the plan seeks to construct new natural gas pipelines, regasification facilities, an oil refinery, and a new hydroelectric plant in a region spanning southern Mexico and Central America . President Fox and other proponents of the deal contend it will lower regional energy consumption costs.

Under the terms of the multi-national energy project, liquefied natural gas will be processed in Oaxaca , Mexico , and then shipped via pipeline to Guatemala . Bolivia , Peru , Malaysia and Indonesia were mentioned as possible suppliers of the LNG. An oil refinery, whose exact location has not been announced, is slated to refine between 250,000 and 400,000 barrels of oil per day. What's more, the Mexican national oil company Pemex will be permitted to franchise dealerships in Central America . More details of the plan are expected to be discussed at a meeting scheduled next month in hurricane-ravaged Cancun .

Commenting to the Chamber of Commerce and Industry of Costa Rica while he was in transit to Mar de Plata, President Fox declared the energy mega-project was moving full steam ahead.

"Next year, we will surely be dressing up these projects to move ahead their construction," President Fox said. "Plan Puebla-Panama is a reality."

Designed to lay new commercial and industrial infrastructure in southern Mexico and Central America , the Plan Puebla-Panama is opposed by broad networks of indigenous, farm, labor, and environmental groups in several nations.

Front-running Mexican presidential candidate Andres Manuel Lopez Obrador almost immediately attacked the energy mega-project, calling it doomed to "failure." On a campaign swing, the candidate for the center-left PRD party blasted Fox for engaging in "presidential tourism" and backing the construction of an oil refinery in Central America, even though Mexico itself doesn't have adequate refining capability. Lopez Obrador has pledged to construct 3 new refineries if he is elected president next year. Criticizing the Plan Puebla Panama as well, Lopez Obrador called on President Fox to "quiet down" and refrain from making commitments to "adventures without future" in the almost 8 months remaining before the 2006 election.

President Fox's Mar de Plata remarks elicited varied responses from other prominent members of Mexico 's political class. Manuel Espino, the head of the president's PAN party, lauded the Free Trade Area of the Americas as "healthy and beneficial to all Latin America ." Expressing a contrary viewpoint, Revolutionary Institutional Party (PRI) President Mariano Palacios chastised President Fox for allegedly turning into a "the spokesman" of a conservative project linked to US interests. The PRI supported the passage of the North American Free Trade Agreement during the administration of Carlos Salinas de Gortari in 1993.

Sources: El Universal/Notimex/AP/EFE, November 3, 4, 5, 6 2005. Articles by Jose Luis Ruiz, Lilia Saul, and editorial staff. Proceso/Apro, November 5, 2005. Article by Cesar Pena Sanchez.

Money Flows on the Cross-Border Cattle Trail

 Sonoran cattlemen are counting their dollars as another export season winds to a close. Prices are up, the market is steady, rain is falling, and cattle diseases are under control. Driving their herds north across the United States border, Sonoran ranchers are bringing to close a profitable business year, which finishes at the end of August. In a recent interview, Jorge Luis Molina Elias, the assistant secretary for ranching in the Sonora state government, shed a favorable light on the current market situation for cattlemen.

 According to Molina, 250,000 cattle from Sonora have been exported to the United States this year, including 223, 400 heifers and 26,600 cows. Although the total export numbers represent a drop as of August 1 over the 2003-2004 business year's figure of 267,700 animals, Molina said dollar earnings are higher this season. Last year, Sonoran cattle export sales to the United States brought in $133 million dollars compared to $142 million dollars made so far this year, even with fewer animals sold. According to Molina, prices received by producers in 2004-2005 averaged $1.45 cents per pound.

 Molina added that another difference between the current year and the previous one is that fewer cows are being proportionally exported, because many producers prefer to keep reproducing their herds. Good sanitary conditions prevailing in Sonora are another plus for the border state's ranchers, Molina said. The livestock official said confidence in the health of Sonoran cattle is such that United States authorities permit the importation of  animals without proof of tuberculosis tests. Mexican cattle producers in Sonora and other states have maintained a strong relationship with the U.S. export market through the years. Typically, Mexican cattle are exported to the U.S. to be used as breeding stock or are fattened up in Midwestern stockyards and then slaughtered for human consumption.

 Source: El Diario de Sonora/Notimex, July 31, 2005.

 The Proliferation of Portable Casinos

 Like mushrooms after a rainstorm, they keep spreading. And people like Francisca Figueroa find them intoxicating. The Ciudad Juarez resident is among a growing number of customers who plop their pesos into portable machines with the intention of winning money. Initially dropping five pesos into a "luck machine" situated outside the fast food restaurants near a heavily-visited social security institute hospital, Figueroa was gleeful to eventually earn 90 pesos. Eduarda Franco, the concessionaire of the luck machine, said she installed the slot so "children could have fun." Franco explained that she divides the proceeds from the day's take with the machine's owner. "But it's not a lot," contended Franco. "It's mainly for the people to have fun." The small restaurant/slot operator didn't disclose the identity of the luck machine's owner.

 The bad news for Franco and her customers is that the luck machine is illegal. "They don't have permission to operate," said Alberto Reyes Rojas, the director of Ciudad Juarez's municipal commerce department. "(Luck machines) aren't allowed because they are casino class." Current Mexican law permits some forms of gaming like off-track betting and bingo, but casinos are still mainly prohibited. Reyes said his inspectors confiscated 200 luck machines and levied fines of up to $110 dollars on violators during the last three months. He added that machine owners can regain their properties, but can't reinstall them.

 Some say the luck machines are surpassing regular video games in popularity. They are sprouting up in places with brisk human traffic like the fast food locals near the social security hospital and in mom-and-pop grocery stores. Elvira de la Torres, the proprietor of a small store in the Division del Norte neighborhood of the city, admitted she has had one of the machines for the past two months but didn't know if it was illegal. "People come and sometimes they win and sometimes they lose," said de la Torres. "But it's mainly to have fun."

 Source: El Diario, July 26, 2005. Article by Pedro Sanchez Briones.

 A Border Business Boom and a Health Insurance Bust

 Rated Texas’ fastest growing city, McAllen is on the move. Bordering Reynosa, Mexico, the city keeps attracting new people and businesses as it nudges up with Laredo, Texas, and Las Vegas, Nevada, to join the club of United States boomtowns. But McAllen’s Hidalgo County also boasts the distinction of being Numero Uno on the list of U.S. counties with the highest number of residents lacking health insurance.  

 According to the U.S. Census Bureau , Hidalgo County’s population more than tripled from 181, 000 people in 1970 to 658,000 in 2004. During the 34 years studied, Hidalgo County’s population increased by 260 percent while the overall U.S. population increase   was about 44 percent. “McAllen is where the action is,” said Jake Fuller, a healthcare consultant. “McAllen reminds me of the great growth spurt Dallas enjoyed from 1975 to 1985.” said Fuller.

 Experts say a combination of high birthrates and in-migration explain the population explosion. One factor boosting McAllen’s growth is the economic upturn across the Rio Grande in neighboring  Reynosa, Tamaulipas. Called by some a “China on the Border,” Reynosa added jobs in the maquiladora export assembly plants during recent years even while other Mexican border cities like Tijuana and Ciudad Juarez lost them. By April 2005, Reynosa counted 126 maquiladoras employing 87, 164 workers. The Andrew Corporation, Delphi, Fujitsu, General Electric and Johnson Controls are just several of the major companies with plants in Reynosa. Cynthia Brown, an associate professor of economics and finance at the University of Texas-Pan American, said the manufacturing companies draw other firms that supply and service the industrial sector. Additional businesses then provide more goods and services. “All you’ve got to do is go around town and see the growth,” said Nancy Boultinghouse, marketing director for the McAllen Economic Development Corporation and Foreign Trade Zone.

 Nonetheless, health insurance coverage is one category which has not keep pace with the growth in McAllen and the surrounding areas of Hidalgo County. Updated statistics recently released by the U.S. Census Bureau show that Hidalgo County has the highest percentage of uninsured residents of any U.S. county. The new numbers report that 192, 253 people, or 32.3 percent of Hidalgo County’s population, remain without health insurance. Another border county, El Paso County, Texas, ranks second on the list, with 185,007 people, or 27.4 percent of the population, classified as uninsured.

 Sources: The Monitor (McAllen), July 24, 2005. Article by Matt Whittaker. El Paso Times, July 23, 2005. Article by Erica Molina.  cfomaquiladoras.org  medc.org

Former Copper Miners Demand Their Due

 Hundreds of former miners and their family members stormed the municipal government offices of a historic Sonora mining town this week. The protest erupted in the old copper mining town of Cananea, located southwest of the Sonora-Arizona border community of Agua Prieta, after one-time workers grew angry upon receiving profit-sharing payments owed to them from the Mexican government's 1990 sale of Cananea's large copper mine to private interests. 

 Felix Duarte Flores, an activist with the workers' group, accused the leader of the Miners and Metallurgical Workers Union, Napoleon Gomez Urrutia, of slashing the payments originally promised to 3,500 former miners and other workers. Conflicting versions claimed that the checks, which ranged from about $1500 to $8,000 dollars, were far less than the sum ex-employees were expecting to receive. Former workers also complained that a lawyer handling the pay-outs, Amanda Cota Canchola, was charging a $200.00 dollar fee per payment without giving receipts, and that some checks bounced.  Duarte contended the veteran workers were "aware they've been the object of a big robbery."

 There was no immediate comment from union leader Gomez, but attorney Amanda Cota said the absence of receipts was legal under an agreement with the miners' union. Widows of former workers voiced another grievance during the protest, saying some in their group only received $300 or $400 dollar pay-outs, even after their husbands dedicated 20 or more years of their lives to the mine. 

 Vowing to step up her protest, widow Maria de Lourdes Esquer said she felt "defrauded" by the payments. Confronted by the protestors, Cananea Mayor Francisco Garcia Gomez expressed sympathy with their demands, but argued he had no power to do anything. Mexican army troops and Sonora State Judicial Police briefly made an appearance in Cananea, but Mayor Garcia convinced them to pull back and be replaced by municipal  police.     

 The Cananea protest was but the latest in a town with historic and symbolic significance in Mexico. Possessing one of the world's largest copper ore deposits, Cananea was the scene of a 1906 miners' rebellion which was bloodily repressed by the government of Porfirio Diaz. Led in part by the legendary Flores Magon brothers, the revolt was widely considered one of the opening shots of the 1910 Revolution; some have compared it to the Battle of Lexington and Concord in the United States.

 Nationalized in 1971, the copper mine was subsequently sold for $525 million dollars by the administration of former President Carlos Salinas de Gotari to a consortium which later emerged as Grupo Mexico. Critics charged the government with selling a valuable public resource for a price way below its true value. Later, in 1999, a strike at Cananea was broken. Since privatization, many workers have been laid off.

 Regarded as the world's third largest mining company, Grupo Mexico owns the American Smelting and Refining Company (ASARCO). The company is embroiled in a battle with environmental and community groups in El Paso and Ciudad Juarez over ASARCO's application to renew a state air quality permit for its El Paso copper smelter and restart production at the plant.  

 Buoyed by rebounding copper sales, Grupo Mexico is in a solid market position. This week the minerals giant posted a 32 percent leap in second quarter net profits over last year's figures. Copper prices are currently reported at 16-year highs, driven by robust Chinese demand and higher sales in the United States.

 Sources: Diario de la Frontera/Semanario Plan A, July 21, 2005. La Jornada, July 21, 2005. Article by Cristobal Garcia Bernal. Reuters, July 21, 2005. CorpWatch, March 12, 1999. Article by David Bacon. Proceso, July 2, 1990. Article by Carlos Acosta. grupomexico.com

Residents Heated Up Over Electric Bills

 Blazing summer temperatures that tilted the thermometer well past the 100 degree Fahrenheit mark aren’t the only things that have residents boiling over. While fans spin at top speed and air cooling systems spit out chilled air, electricity bills ravage local pocketbooks.  “I don’t know how I am going to pay it,” sighed Juan Agundez, after seeing his electricity bill of about $180 dollars. On average, San Luis Rio Colorado residents paid between $60 and $100 dollars for their electricity during the month of July.

Prompting complaints from residents, the charges are encouraging some to organize protests against the Federal Electricity Commission (CFE), the main energy supplier in Mexico. Petra Santos Ortiz, a former member of the Mexican Chamber of Deputies, is emerging as the leader of the protest movement in San Luis Rio Colorado. Santos said that the CFE’s commitments to accept payments in installments and postpone service cut-offs of delinquent customers are helpful, but don’t get to the root of the problem faced by San Luis Rio Colorado energy consumers.

 Despite government subsidies and installment payment programs, Santos and others still regard the electricity rates as too high. They are calling on the CFE to implement “just rates” for the border region. “I want the (CFE) to take into account the families that pay for electricity,” said resident Jorge Espinoza. A similar consumer movement against electricity charges is active in nearby Mexicali,  Baja California. It is led by the Authentic Civic Front, a group connected with retired railroad workers. According to protest leader Lorenzo Cortes Beltran, the movement backs a legislative measure sponsored by some Mexican congressman to take away authority for setting electricity rates from regulators in the federal taxation and finance department and hand it over to federal legislators. Meanwhile, San Luis Rio Colorado electric consumers fear their bills will continue to soar if the temperatures keep climbing. One forecast for Tuesday predicted a high temperature of 117 Fahrenheit for the town bordering southern Arizona’s Yuma Valley.

 Sources: La Cronica, July 18, 2005. Article by Santiago Barroso Alfaro. La Voz de la Frontera (Mexicali). Article by Gustavo Garcia Rivas.

A City Under Siege Wants Tourists to Return

 Fed up with bad news and a vanishing tourist economy, local business leaders and city officials in Nuevo Laredo are resolving to turn things around. A joint city-Tamaulipas state tourist promotion campaign is being launched in a bid to attract visitors from other parts of Mexico and the United States. As part of the $500,000-dollar publicity campaign, free charter bus trips will be offered to upwards of 200 visitors daily from San Antonio, Texas, who will be given coupon booklets with food, medicine, jewelry, food, and drink discounts at participating Nuevo Laredo establishments. Houston will be another city targeted in the promotional blitz.

Tourism plummeted in recent months in Nuevo Laredo following a sharp escalation of narco-violence, climaxing in the occupation of the city last month by federal troops and the virtual dissolution of the Nuevo Laredo municipal police force, many of whose members were implicated in acts of corruption and criminal violence. Manuel Sifuentes, a Nuevo Laredo novelty merchant,  watched sales evaporate and numerous workers get laid off from businesses dependent on tourism. "There has been a serious breach of responsibility here, because the police lost control and joined the criminals," said Sifuentes. "The police protected the bad guys instead of the people."

Ramon Garza of Nuevo Laredo's tourism office insisted that law-abiding tourists and "honorable people" had nothing to fear in his city, since the victims of the violence, who number in the hundreds, were allegedly individuals connected with criminal bands. "We are determined to change the stigma that was branded on our city," Garza vowed. Nonetheless, violence continues in Nuevo Laredo, in spite of the high-profile Operation Safe Mexico directed by the federal Mexican government in the border city. One of the latest murder victims was found burned in an empty lot last weekend in the Reservas Territoriales section of Nuevo Laredo. Authorities initially identified the body as belonging to a man.

 Sources: Laredo Morning Times, July 10, 2005. Article by Miguel Timoshenkov. La Jornada,  July 10, 2005. Article by Javier Valdes, Ernesto Martinez and correspondents. El Diario de Nuevo Laredo, July 9, 2005. Article by Gabriel Garza Flores Jr. 

A Chinese Trampoline to Jump Over Laredo

 Situated on the southern Pacific Coast in the state of Michoacan, the port of Lazardo Cardenas is gearing up to be Mexico's next big nexus of international trade. Isidoro Ruiz Argaiz, a federal deputy in the lower house of the Mexican Congress, said recently a deal with the city council of Kansas City, Missouri, will allow Michoacan authorities to set up a customs terminal in the Midwestern city for goods shipped by rail from the Mexican port to the United States. According to Congressman Ruiz, the idea is to circumvent the "customs monopoly" allegedly held by brokers in Laredo, Texas, A visit by Missouri Governor Matt Blunt to Michoacan to follow up on the deal is expected sometime next November.

 A Michoacan-Missouri trade route would ease the flow of Chinese-produced goods for the U.S. market. Lazardo Cardenas' proximity to Mexico City in comparison to the other big Pacific port, Manzanillo, would likewise give the Michoacan port an advantage in handling imports from the Far East headed  for Mexico's biggest consumer market.  Given Lazaro Cardenas' increasingly strategic position, Mexican government agencies and private investors from Hong Kong, the United States, Spain, and Argentina are busy building up the port's infrastructure, upgrading energy production facilities and laying plans for expanded rail lines. The Spanish-Argentinian firm Repsol YPF is slated to build a $350 million-dollar liquified natural gas terminal in Lazardo Cardenas, and the Michoacan state government is poised to spend about $10 million dollars in improving the port terminal- including the construction of a free trade zone on an island near the port. Meanwhile, a subsidiary of the world's largest port investor, Hong Kong-based Hutchison Whampoa Limited, is in the process of expanding a container terminal at Lazardo Cardenas. And reports are circulating that Wal-mart and Costco plan to construct big warehouses near the port.  Another plus seen for Lazardo Cardenas' expansion rests with its proximity to the huge electrical generation plants at the El Infiernillo Dam and Petacalco Bay, Guerrero. Plans are afoot to increase the generation of electricty at the coal-fired thermoelectric plant operated by the Mexican Federal Electricty Commission in Petacalco from 2100 to 2800 megawatts per year.

 Nonetheless, the Petacalco plant could well prove to be a sticky point in the expansion of Lazaro Cardenas. For more than 10 years, fishermen and farmers in the small town have organized periodic blockades of the plant and staged public protests. They contend that emissions of air contaminants and warm-water discharges from the thermoelectric plant are killing off fish and fruit trees.

Additional Sources: El Sol de Morelia, July 4, 2005. Articles by Eduardo Lopez Nolasco, Rene Chavez, Silvia Erendira Zamudio Zamitz, and editorial staff.  

Migrant Dollars Drive Mexico’s Economy

 More evidence has emerged that remittances from migrants working in the United States are one of big engines driving today’s Mexican economy. Recent projections from the Bank of Mexico estimate that dollar remittances for 2005 will reach at least $20 billion dollars, an amount double the earnings from the vegetable export sector of the economy promoted under the North American Free Trade Agreement. An earlier study by the U.S.-based Pew Hispanic Center calculated that one-fourth of Mexico’s 24 million households receive remittances from the United States. The Pew study credited remittance income for fueling consumer demand in Mexico and boosting the domestic construction industry. Many migrants and their families use their U.S dollars to build homes or complete existing ones. Clued by the dollar flow, the Mexican government has launched a new mortgage program that will be financed with remittances. 

According to the Bank of Mexico, 51 million money transfer operations from the United States to Mexico are realized each year, with each transaction averaging $326 dollars. The business has been very profitable for U.S. banks and other firms which charge fees for the money transfers. A report by the Washington-based National Council of La Raza estimated that from mid 2002 to early 2004, about 400,000 new bank accounts were opened in the United States at branches which offer remittance services. Banorte, the only bank left in Mexico which is still 100 percent Mexican-owned, is taking note of the trend and planning to open a bank and money transfer business in the United States, according to Luis Pena Kegel, the company’s general director.  Ultimately, many of the remittance dollars are recycled in border cities like El Paso or Laredo by Mexican shoppers who prefer buying on the U.S. side.

 Source: La Jornada, June 1, 2005. Article by Roberto Gonzalez Amador

City Pushes Agricultural Development

The municipality of Mexicali is seeking to capitalize on its agricultural sector. With this goal in mind, city officials recently founded the Rural Sustainable Development Council. "One of the fundamental priorities that’s required for moving forward the Mexicali Valley will be the installation of agro-industries,” explained Mayor Samuel Ramos Flores. “We have many pluses to offer, including water, power, railways, and skilled labor…” As a response to long-standing popular demands, the city government of Mexicali established the council to represent the rural sector in municipal decision-making and economic development. 93 organizations representing farm groups as well as local, state and federal government agencies will form the new body. According to Mayor Ramos, the council will work in tandem with a new farming and fishing promotional agency to encourage agricultural production, give legal advice and search for means of reducing operating overhead.

 “The idea is to take away the uncertainty of what the world market will define, as happens with the price of wheat or any other agricultural product,” said Ramos. “Our producers always suffer from a dependency on the supply and demand of the market,  and now is the time for them to be prepared to consolidate their management, purchases and organization.” Benjamin Castillo, coordinator of municipal delegations, added that the new programs  will be a way for producers and other sectors of society to propose their own alternatives and improve their quality of life. Fed by the irrigation system of the Colorado River, the region of Mexicali, Baja California, and nearby San Luis Rio Colorado in Sonora boast more than 600,000 acres of arable land. Wheat, cotton, green onions, and asparagus are among the 40 or so commercially grown crops.

 Sources:  La Voz de la Frontera (Mexicali), May 17, 2005. Article by Guillermo Sayago.  California Center for Border and Regional Economic Studies, San Diego State University.

Remittances Grow But Don’t Translate into Economic Development

New figures released by the Bank of Mexico (Banxico)  show increased flows of money from migrants working in the United States to their families in Chihuahua state. According to Banxico statistics, $58.7 million dollars were sent home to Chihuahua from the U.S. in the first trimester of 2005, up from $38.85 million dollars during the same period in 2003. In total $ 219.87 million dollars in remittances were sent to Chihuahua in 2004, a leap from $91.52 million dollars in 2003. Nonetheless, Banixco figures tend to underestimate the real amount of remittance money entering the Mexican economy, because they don’t take into account the undeclared cash carried back home by migrants or their relatives. Previous studies by the Colegio de la Frontera Norte, Pew Hispanic Center and the Tomas Rivera Policy Institute cited by the Diario de Juarez newspaper indicate that remittances aren’t used much to create new businesses and generate new jobs.

The studies estimated that between 75 to 79 percent of remittances are used to pay for ordinary living expenses. Another 2 to 7 percent is spent on education; 1 to 3 percent to pay off debts; 3 or 4 percent to enjoy vacations or other leisure activities; and only 1 to 5 percent is invested in land or business development. A large chunk of remittance money is skimmed off the top by banks and money wiring services that charge commissions between 10 and 15 percent for transferring funds from the U.S. to Mexico.Rodolfo Rubio, a Colegio de la Frontera Norte researcher who specializes in migrant flows, said Chihuahua residents like other Mexicans typically use their remittance income for basic survival.  “There is not much difference between the recipients of money from one state to another,” said Rubio.

In the case of Ciudad Juarez, Chihuahua’s biggest city, remittances are actually plowed back quickly into the U.S. economy. Many Juarez residents spend their money in El Paso stores which offer cheaper products. Since many of the El Paso shops frequented  by  Juarez consumers are owned by Korean immigrants, the ultimate destination and impact of border remittances becomes a broader, global question.  Remittances sparked a new round of  binational polemics in recent days after Tony Garza, the U.S. ambassador to Mexico,  remarked in Monterrey, Nuevo Leon, that an economy based on remittances and petroleum exports does not equal real economic policy.  Garza’s words provoked a protest from Interior Minister Santiago Creel ( a 2006 presidential aspirant ), who said that outsiders, especially ambassadors, should not  interfere in Mexico’s internal problems.  

Sources: Diario de Juarez/Notimex,  May 14, 2005.  Diario de Juarez, May 13, 2005. Article by Lorena Figueroa. El Universal, May 13, 2005. Article by Noe Cruz Serrano.

Child Labor Criticized on May Day

 Thousands of workers paraded in both Ciudad Juarez and Chihuahua City in honor of the May Day holiday. While union members heard speeches commemorating their traditional day, many others, including children, were out on the streets working. In remarks to the El Diario newspaper, members of Ciudad Juarez non-government organizations criticized the persistence of child labor in different sectors of the border economy. According to the Center for the Attention of Border Minors (CAMEF) more than 2,000 children work every day outside their homes in Ciudad Juarez. An estimated 400 children labor as street vendors, car washers, shoe-shiners, and professional panhandlers, according to CAMEF figures. Another 1,600 work in public places like parks or are employed as baggers in commercial centers. Felix Perez, an organizer with the Labor Studies Center and Workshop (CETLAC) said official indifference prevails about the persistence of child labor in Ciudad

Juarez. Perez added that if genuine interest existed, children would be in school instead of on streets attempting to support themselves and their families. “There’s no real concern,” insisted Perez. Sergio Conde Varela, the director of New Country, another non-governmental organization, said Mexican law already prohibits children under the age of 16 from working, but that legal restrictions need to be tightened up to curb child labor. 

 Sources: El Diario de Juarez, May 1, 2002. Article by Pedro Sanchez Briones. Frontenet.com, May 1, 2005.

Now Hiring: Nogales Maquiladora Jobs Abandoned During Holiday Season 

The pattern is the same every year at the maquiladoras in Nogales: workers leave town on December 20 for the holiday season and do not return.  When they are not back by January 3 companies terminate the missing employees and look for new people, according to an article from the Nogales edition of the Sonora newspaper El Imparcial.

Although the figures for personnel turnover during the holidays have not yet been determined by the Asociación de Maquiladoras de Sonora (Sonora Maquiladora Association, AMS) and the Asociación de Relaciones Industriales (Association of Industrial Relations, Arinac), El Imparcial reported that five companies alone currently have 264 job openings.  However, it is possible that this number will rise to between 800 and 1,000 openings.  

Hiring efforts employed by the maquiladoras can be seen throughout the city.  Advertisements are taken out in newspapers and in other media.  Also, banners announcing job openings are hung on companies' buildings where they can be seen from the road.  As in the past, all of this should result in the maquiladoras' personnel situation returning to the desired level by the end of the third week in January.  

According to El Imparcial, workers typically break for the holidays on December 20.  Many of them leave Nogales and go back to their homes in Southern Sonora or Sinaloa (the neighboring state to the south).  Others travel further to states in the center of Mexico or in the far south of the country.  Some workers will stay in their home towns for extended periods and not return immediately after the holidays.  Other workers return and get jobs with different companies.  

Juan González, head of human resources at Avent, said that his company has 60 jobs available after the holidays.  The jobs opened up after workers did not come back from holiday leave.  González estimates that 5% of the maquiladora's 1,300 employees were fired when they did not return to work in January. 

Source:  El Imparcial (Nogales), January 13, 2005.   Article by Luis Arvayo.  

Juárez Adds 20,000 Jobs in 2004

So far this year Ciudad Juárez has added 20,000 jobs, says Carlos Salas of the Cd. Juárez office of the federal Secretaría de Economía (Secretariat of Economics, SE).  Of the new jobs, 15,000 were in the maquiladora industry and the rest were in other parts of the economy.  The employment figures are from the Mexican Social Security Institute. 

According to Asociación de Maquiladoras (Maquiladora Association) statistics  reported in the Cd. Juárez newspaper El Diario, the city's maquiladora industry currently employs 220,000 people.  In 2000, before the economic recession in the US, there were 260,000 maquiladora jobs in Cd. Juárez.  By 2002, that figure had fallen to 190,000.  In 2003 there were approximately 200,000 maquiladora jobs in the border city of 1.2 million people. 

Salas also stated that Chihuahua will export $12 billion in goods in 2004.  The maquiladora industry is responsible for 96% of this amount.  Cd. Juárez produces 80% of the state's manufacturing output, Chihuahua City is responsible for 12% and the other 8% comes from the other parts of the state.  

Salas says that the number of maquiladora jobs in Cd. Juárez will easily increase in 2005.  With companies such as Electrolux, Lexmark and Foxconn set to open new facilities or expand existing ones, the city will add jobs next year. 

A national maquiladora association, the Consejo Nacional de la Industria Maquiladora de la Exportación (CNIME), says that over the past three years Mexico has generated 118,000 maquiladora jobs.  This represents nearly 50% of the 240,000 jobs that were lost during the US recession. 

Source:  El Diario, December 16, 2004.  Article by Gabriel Simental.