PETRAS ESSAYS IN ENGLISH

January 1998

Our "Man in Mexico" and the Chiapas Massacre

Mexico is a virtual trade colony of the U.S.

James Petras

The massacre of 45 Indians in Chiapas by government-sponsored paramilitary forces has to be viewed within the broader context of regimes' vigorous implementation of the socio-economic model and its growing political isolation within Mexican society. While there was worldwide condemnation of the massacre (over 58 cities and several parliaments in Europe) and its perpetrator in the Mexican government, Wall Street, the city of London, and other financial centers around the world have been lauding the "economic recovery" and the 5 percent to 6 percent growth rate over the past two years. The polarization within Mexico is reproduced overseas. The very essence of "the model" is the attraction of investment based on lowering living standards to cheapen the costs of the booming exports sector. The policies that attract investors deepen poverty in Mexico: the opening of markets has led to a flood of cheap imports, particularly basic grains, while privatization has meant the sell-off of public enterprises. The former has condemned millions of peasant producers to poverty while the latter has led to the concentration of wealth, the firing of hundreds of thousands of wage and salaried workers and the growth of the informal economy.

While the Zedillo regime plunges ahead with the "model" the governing party-state (the PRI) suffered a humiliating and an unprecedented defeat in the Congressional and municipal elections. It no longer is able to command a majority in Congress for the first time in over 70 years. The PRI also lost control over Mexico City government to the leader of the leftist Revolutionary Democratic Party Cuathemoc Cardenas. Equally important mass social movements among the peasants in the South and the workers in the Central North are showing signs of active organizing outside of the state controlled unions. The government has responded by reaffirming the continuity of its socio-economic policies and heightening repressive activity through the widespread use of paramilitary forces.

Growth for Whom?

After the Mexican crash of 1994-1995, the economy grew between 1996- 1997. Growth was concentrated in selective sectors of the economy and largely benefitted a small group of foreign and big national firms.

Apologists for the Mexican regime, both here and in Mexico cite the growth of the economy (close to 6 percent) the size of Mexico foreign exchange reserves ($27 billion), its growing exports (up 15 percent for 1997), and its booming automobile motor exports and vehicle sales, up 15 percent and 41 percent respectively. Mexico, we are told, has passed the worst of its debt crises and the near collapse of its economy and is well on the way to recovery, with "sound fundamentals."

To ensure continued growth to guarantee the continued flow of overseas funds and to consolidate foreign investor confidence, President Zedillo appointed Jose Angel Gurría as Minister of Finance, the position directly responsible for negotiating with the international banks and U.S. Treasury. Outside of government circles he is called the "Angel of Dependency," for his generosity with foreign investors and his willingness to give free sway to U.S. police, military, and drug officials within Mexico's borders. One top official at Nomura Securities summed up Wall Street's euphoria upon hearing of Gurria's appointment. "He's one of ours."

A critical perusal of the Mexican economy reveals that severe problems continue to fester and make the recovery very fragile. First of all, the agricultural sector continues to stagnate. Per capita growth was negative. What agricultural growth did occur was concentrated exclusively in the export sector producing goods for the U.S. and Canadian market. Food imports amounted to $20 billion dollars—low-priced corn, rice, and other staples—which decimated small producers and made Mexico extremely dependent on outside sources for basic food items that were and can be grown in Mexico.

The massive decline of food production is due to a sharp decline in bank credits (over 14 percent in real time between 1995-1997). And the overwhelming concentration (over 90 percent) of credits to agro-business export firms. If one compares state funding of agriculture between 1980 and 1996 the decline reaches 50 percent. U.S. agro-business' takeover of the Mexican market at the expense of millions of peasants thanks to free trade is clear from a reading of the trade data. Mexican imports of basic grains increased five fold between 1986-96, from $783 million to $4.5 billion in 1996. More than half of Mexico's food imports come from the U.S. The same is true in cattle: Mexico imported 35,000 tons in 1995; in 1996 it jumped to 150,000; and 1997, 250,0000.

As a result, Mexico has a negative agriculture balance of trade of $1.2 billion with the U.S. Instead of exporting goods, it is exporting impoverished peasants driven to bankruptcy by the free market.

Even where Mexico has trade advantages as with avocados and tomatoes, the U.S. has imposed controls and restrictions on Mexican exports. Thus practicing a very select brand of "free trade"—and increasing the trade surplus while undermining Mexican farmers.

While Mexico has accumulated close to 30 billion dollars in reserves, much of it is based on short-term high interest bonds, dependent on the regime's ability to keep wages low, the workforce docile, and inflation down. The overall financial situation is far from solvent. Mexico paid Clinton's 1995 loan by borrowing from other foreign sources. Thus the overall debt continues high. While Mexico's short-term debt has declined its overall debt increased 50 percent. Debt payments depend heavily on oil earnings and oil prices are declining. The Asian crises drives down demand and the mid-eastern oil suppliers pump out more oil to compensate for lower prices. Internally the financial picture is far from secure. State banking inspectors noted that the amount of bad debts increased 102 percent in the last 3 years and 23 percent of internal loans are overdue or non-functioning. Rising prices (the consumer price index has increased two and a half times between 1994-97) and declining incomes has translated into overdebtedness. Heavy borrowing has led to an artificial short term boost in consumer spending likely to be followed by a sharp decline and a renewed financial crisis.

The current boom in auto motor exports and auto sales in part is a recovery from the sharp two-year decline of 1994-95. Mexico is the principle exporter of auto motors in the world (1.1 million), an increase of 15 percent over 1996. Large-scale new investments are expected over the next five years. All of the auto firms are foreign owned and Mexican subcontractors work for them. Many of the inputs (parts, raw materials, technology, and research) are imported, thus limiting the positive effect on the economy as a whole. Thus, while Mexico's exports increase, its imports are growing even faster. The net commercial surplus declined from $8 billion in 1995 to $1.4 billion in 1997. Meanwhile Mexico's foreign accounts which includes all foreign transactions (including debt payments) have been negative and increasing: the deficit was $1.8 billion in 1995 and $6.6 billion in 1997. Looking at the balance of service payments we find that Mexico has a $13 billion deficit—most of it going for interest payments on the foreign debt.

Mexico has become a virtual trade colony of the U.S.: 87 percent of Mexico's exports go to the U.S. and 76 percent of imports come from the U.S.

The Angel of Dependency

To emphasize his determination to maintain the lopsided dependent growth model, President Zedillo appointed the above mentioned Jose Angel Gurría to head the Finance Ministry. After learning of Gurría's appointment the Mexican newspapers reported "euphoria on Wall Street," and a financial advisor in the city of London gloated that "It couldn't be better."

Why does Gurría come so highly recommended? First and foremost was his role in sabotaging a Latin American debtors cartel that was in the process of being organized in 1986. While the rest of Latin America's finance ministers were preparing a document to collectively reduce the percentage of debt payments to the overseas bankers, Gurría went ahead and signed a new agreement with the IMF in which he committed Mexico to following a strict payment plan. In the follow-up, he supported the strict subordination of the Mexican economy to all the articles and clauses of the IMF austerity plan, in effect becoming an unpaid functionary of IMF policy makers. He was particularly generous in setting the terms for the privatization of Mexican public enterprises, thus providing speculators with prodigious windfalls.

More than any official in recent history he has been instrumental in undermining Mexican sovereignty. While foreign minister between 1995- 1997 he abolished Mexico's traditional respect for political asylum for refugees. He eliminated constraints on the operations of the DEA, FBI, and CIA operatives in Mexican territory (in the name of international cooperation).

Gurría ignored U.S. violations of the NAFTA agreement regarding constraints on Mexican exports of tuna, glass, cement, and the circulation of transport. While mouthing rhetoric about greater trade diversification especially with the EEC, Mexico has become even more dependent on the U.S.

Social Crisis Deepens

President Zedillo's economic strategy is designed to lower living standards to attract U.S. capital. When the speculative bubble burst in 1994, and billions in U.S. capital fled, Zedillo and the Clinton administration designed an austerity program which further depressed wages and drove out Mexican competition. U.S. capital responded favorably. The result was a flood of U.S. agricultural imports and the massive entry of U.S. multinationals in the highly exploitative "maquiladoras," the assembly plants in the repressive wage zones (where labor legislature is nonexistent and unionization is prohibited).

In early 1998 El Financiero (January 3, 1998), Mexico's leading financial newspaper reported that 67 percent of the households in the rural zones were "extremely poor"—that is they couldn't meet their minimal basic requirements. Since NAFTA was implemented and after the crash of 1994 and "structural adjustment programs were implemented by Zedillo, salaries have declined by 70 percent. Indicative of the intensification of exploitation over the past year productivity rose in real terms higher than any country in Latin America. Yet wages stagnated or lagged behind the real rise in the cost of living. New jobs lagged behind the growth in the labor force by a ratio of 3 to 1. For every factory or wage job that was created, five workers turned toward the low-paid informal sector where income is approximately 40 percent less. The maquiladoras, the major source of factory work, now number 3,784 plants employing 963,199 workers, mostly women. Over 50 percent are U.S. or jointly owned by U.S.- Mexican capitalists, 43 percent by Mexicans, mostly sub-contracted by U.S. firms, and the rest by Asian and European capital. The maquiladoras generated $4.2 billion in sales in the month of October (1997) and overall they generate 40 percent of foreign sales. The "recovery" period (1996-1997) has been based on continued downward pressure on salaries. Over the last 33 months salaries dropped 25 percent, added to the almost 50 percent decline during the "crisis" of 1994-1995. For Mexican labor the "crisis" has never ended; the recovery has never begun.

If urban factory labor has provided the cheap labor to fuel the return of the investors to the factories, in the countryside the mass of rural labor has experienced greater marginalization and exclusion: 34 percent of the rural laborers receive no pay for their work; 32 percent receive salaries below the minimum wage (30 pesos or $3.50 a day); 72 percent of the rural households depend on outside income to satisfy basic necessities; only 5 percent of the rural population receives any social benefits (health insurance, pension, etc.).

The unemployment rate in rural areas is 34 percent. The decline of employment, the loss of land to unequal competition with U.S. imports and by agro-business complexes is keeping wages down, particularly in the south of Mexico. Agricultural workers earn 18 pesos ($2) in Chiapas. Similar conditions are found in the predominately rural states of Guerrero, Oaxaca, Michoacan, and Vera Cruz.

Almost 80 percent of the new jobs are in the low paid services that offer no security, no future, and subsistence or below subsistence income. Zedillo's new model has increased unemployed/underemployed by 71 percent and decreased income by 70 percent. In the meantime, the state run "trade union" apparatus, the Mexican Confederation of Labor (CTM), continues to hold wages to levels decreed by the regime. For 1998 the CTM endorsed the government increase of 14 percent, at least 5 percent below what independent economists estimate will be the real increase in the cost of living. The CTM's main function is to police the factories and collaborate with the police and bosses in physically repressing independent unionists. In Chiapas the CTM has supported the PRI officials responsible for the massacre of the Indians.

The independent trade union, the Authentic Labor Front (FAT), has pointed out that the "modernization" of industry has meant more intensive exploitation, the elimination of fringe benefits, and lower salaries. Bertha Lujan, general coordinator of FAT, compared Mexican salaries to those of the most economically backward countries. The Mexican model thus is based on attracting capital on the basis of a captive low-paid labor force, high interest rates, and unlimited access to Mexican markets. This strategy of necessity requires the continued long-term, large-scale suppression of wages and salaries, and massive displacement and impoverishment of small-scale peasant producers.

The Role of the State in the Massacre

When 45 Chiapas Indians, mostly women and children, were murdered on December 24, the world was outraged: demonstrations took place in at least 58 cities; the Italian and Swiss parliaments condemned the massacre and the Mexican government. The Zedillo regime at first tried to attribute the massacre to internecine conflicts among Zapatistas, local bosses, and rival religious sects. As independent accounts filtered into the media and as the Zapatista reports came on the Internet, the truth began to surface. Survivors named local officials of the governing PRI party as the assassin. The response was immediate: the Italian government called on the EEC to suspend negotiations on a proposed Free Trade Agreement with Mexico. In Scandinavia and the Low Countries, government officials demanded an investigation and punishment of government officials. Even the State Department demanded a "thorough investigation," though Clinton immediately corrected the original version. The State Department followed up with a statement "backing Zedillo's efforts to investigate and punish the culprits." The Mexican government shifted its line away from local vendettas to "local unauthorized officials acting on their own." But with universal outrage in Mexico, and with the majority opposition parties in Congress plus the mayor of Mexico City demanding an investigation of the responsibility among "higher ups," Zedillo forced the resignation of the top federal official in charge, the secretary of Gobernacion (a kind of interior minister equivalent to our attorney general) Chuayffet and the governor of Chiapas Ruiz Ferro. Zedillo also named a new foreign minister, ex- progressive Rosario Green. He then convened a meeting of ambassadors and consuls and instructed them to clean up Mexico's image by "contextualizing" the massacre—namely a return to the "local conflicts" ploy— while exonerating the national government and its principal policy instrument: the military high command.

This attempt to "isolate and localize" the massacre, however, blew up when the Mexican weekly, Proceso, published a confidential military document, detailing the federal army's counter-insurgency program and its active role in organizing paramilitary groups to attack Indian villages suspected of being Zapatista sympathizers.

The organization of state-sponsored terrorist paramilitary groups involved in the actual Chiapas massacre is found in a key military document entitled "The Plan of the Chiapas Campaign." Issued in October 1994 by the Seventh Regional Military Command and designed by the Secretariat of National Defense, its authors were General Antonio Riviello Bazin and the Commander of the Seventh Region with headquarters in Chiapas, Miguel Angel Godinez. The key object was "to cut the support relation that exists between the population and the law-breakers." To that end the document advises that Military Intelligence "secretly organize certain sectors of the civil population, among them cattle ranchers, small property owners, and patriotic individuals who would be employed in support of our operations."

The army would be in charge of the "advising and supporting of the self- defense forces and other paramilitary groups. In situations where self- defense forces don't exist, it is necessary to create them." The purpose of the state-sponsored paramilitary groups was to terrorize the Indian villagers and displace them to areas under state control. "The relocation of these bases of support to other areas will leave the Zapatistas without these essential elements and will lower the morale of the subversives once they are separated from their families." The military high command was responsible, according to the document, for "exercising leadership, co-ordination and control over all the public security forces, making them responsible for the elimination of urban commandos and the disintegration or control over the mass organizations." Since 1994, this counter-insurgency strategy, obviously derived from U.S. low intensity military doctrine, has been systematically applied. Early in 1997, the army organized five training camps for military forces in the region of Chenalho (Chiapas) where the massacre took place. As a consequence, seven paramilitary organizations have emerged under military protection and support. In line with Pentagon psychological warfare techniques, the Mexican military has provided euphemistic names to cover their bloody deeds: "Peace and Justice" (this was the group that murdered the 45 Indians), the Anti- Zapatista Revolutionary Indian Movement, the Red Mask, the Saint Bartholomew of Lomas Alliance, the Chinchulinos. They are led by local PRI politicians (mayors, party leaders, and even federal deputies). Behind military lines they have assassinated scores of Zapatistas with impunity, until the latest massacre forced the government to look for a sacrificial lamb. The ongoing military confrontation is made out to appear as a conflict between "local peasants" when in fact it is the handiwork of a carefully designed military strategy. Already over 6,000 pro-Zapatista villagers have been forcibly displaced, as the document outlined, to areas under military control. Selective assassinations and total destruction of homes and crops is accompanied by theft of any household or farm utensils which are handed over to local PRI peasants. A week after the major massacre, Peace and Justice paras murdered a Tzotzil Indian leader in Tila, not far from the massacre site. After executing him the 90 terrorists left accompanied by state public security forces, according to a report in El Financiero. Two weeks previously the same paras entered the village and announced they would kill the villagers "one by one." In the immediate aftermath of the massacre, the Federal Army invaded several Indian communities and terrorized the population, ostensibly in search of arms. In Altamirano, the president of the community informed a mediating committee of notables that the army "totally destroyed the houses and robbed electrical appliances." The governor of Chiapas was continually informed of the "operation" (read: massacre) while it was going on and expressed his support, in a message transmitted from the governor's offices. The secretary and sub-secretary instructed the police to back the crime.

The counter-insurgency strategy in Chiapas directly involves the president of Mexico and his new lieutenant in Gobernacion, Julio Labastida, who co-ordinates the political and propagandistic line while the military actions are directed by the Army. The psychological warfare strategy involves "talking peace and preparing war" (as sub-commandante Marcos calls it). The purpose is to convince international public opinion of Zedillo's peaceful intentions and to neutralize national opposition. The contrast between Zedillo's rhetoric and behavior is striking: while talking about a peaceful, negotiated solution he sent 4,000 more troops to Chiapas with U.S.-supplied helicopters to occupy and/or surround Indian villages sympathetic to the Zapatistas. The army in turn has fanned out on search and destroy missions in EZLN jungle areas which, up to recently, were off limits to the army under a common government-EZLN cease fire agreement. Clearly the purpose is to force a military confrontation.

Zedillo announced that he was sending his emissary, the secretary of Gobernacion, Francisco Labastida, to negotiate with the progressive bishop of Chiapas, Sammuel Ruiz. At the same time the Army Command claimed to have intercepted messages between the bishop and the EZLN. They accused Ruiz of taking orders from Marcos. The "good cop, bad cop" ploy allows Zedillo to declare himself the "mediator." In fact, the conflict is not between local groups or a military versus guerrillas confrontation but a political struggle between the Mexican regime headed by Zedillo and the EZLN. Zedillo's effort to involve other forces and position himself as an outsider convinced nobody but served as a diversionary tactic to resist negotiating with the EZLN.

It is clear that the paramilitary forces are an arm of the federal military. The latter is closely tied to the Zedillo regime's strategy of destroying the EZLN without provoking a major battle that would frighten foreign financiers and investors. Zedillo has opted for U.S.-style low intensity warfare relying on paramilitary forces. Zedillo's food aid for Chiapas is channeled directly toward PRI loyalists and used to disarm and recruit local Indians to do the machete killings at the behest of the political leaders of the PRI.

Zedillo's call to disarm the EZLN is an invitation to a greater massacre, since all of the victims were unarmed peasants, including women kneeling in church.

General Mario Renan Castillo who was in command of the Seventh Military Region (including Chiapas) is a graduate of Fort Bragg's Special Operations and Special Forces program. He was an eager consumer and practioner of the Special Forces doctrine that was applied in Vietnam which emphasized the creation of paramilitary groups to "clean the territory" of subversive terrorists. Renan Castillo took seriously the lessons of the field manual, especially the chapter on "Internal Conflicts" which read "Paramilitary forces are organized to provide popular self-defense. They operate in their place of origin. They can be full-time or part-time depending on the situation. They aid the forces of order. Together with the police they separate the insurgents from the people to prevent them from mobilizing popular forces or resources. The regular armed forces are the shield behind which they develop. After the consolidation of a military campaign, the local paramilitary forces can assume security and avoid the return of the insurgents." Since 1996, the Pentagon has established a special forces training program for 300 Mexican officials. In 1997, 1,500 Mexican military officials passed the elite training program for rapid response. Special rapid action forces and U.S.-supplied helicopters and surveillance planes are in place for "surgical strikes. The U.S. choppers are constantly hovering over Zapatista villages. The anti-narcotic military training has been converted into an instrument to repress the impoverished villages of Chiapas.

U.S. military doctrine and training of the repressive forces accompanies U.S. support for the free market economic policies of President Zedillo. The massacre in Chiapas highlights the real meaning of U.S.-Mexican cooperation; free markets and machine guns. On the other side of the barricades, the continued struggle of the Chiapas Indian communities, their growing allies in the countryside in Mexico City and overseas represents another kind of international cooperation: popular solidarity in defense of autonomous self-governing communities.