Magazine article New Internationalist

The New Conquistadors: The Evaporation of an Economic Model in Mexico Shows That Emerging Countries Are Not Waving but Drowning

Magazine article New Internationalist

The New Conquistadors: The Evaporation of an Economic Model in Mexico Shows That Emerging Countries Are Not Waving but Drowning

Article excerpt

ON the final day of January President Clinton issued an emergency $20 billion facility to back the Mexican peso, by-passing Congress in an anti-constitutional move unprecedented in peacetime.

The day before-already 40 days after the peso devaluation of 20 December-the Mexican stock market (the Bolsa) had fallen yet again, while the peso had hit a new record low. The Bolsa had already lost half its value in just 11 days between devaluation and the end of 1994. Mexico, with billions of dollars in short-term loan payments due within a month, was by the end of January 1995 a hair's breadth away from complete default.

Behind US anxiety about Mexico lay an even more profound concern about the fragility of the international exchange system itself. Hence a dramatic late-January public gathering, before President Clinton's announcement, of all the neurologically living US Presidents, along with every Secretary of State and Treasury Secretary from the past 20 years-the political equivalent of going nuclear-to demand enactment of the 'Mexican Bail-Out', then unexpectedly mired in Congress.

When Wall Street catches a cold, of course, thousands of people in the Third World die of pneumonia. Sure enough, early in the crisis Mexican leaders announced a program of sweeping privatizations and an austerity plan to hold down wages.

Privatization' in Mexico means offering up to the northern New Conquistadors the remainder of the already-plundered national patrimony: banks, airports, seaports, roads, rail lines and electric utilities. Loose formulations like 'holding down wage increases' cover the gutting of already low living standards. According to a late-January calculation by the Mexican newspaper La Jornada the average earnings of 60 per cent of the population will drop from a paltry $4.00 to a desperate $2.82 per day.

The immediate cause of the crisis was elementary: the US, with the collaboration of the quisling and fabulously enriched Mexican elite, had simply bled the country white. The sell-off of national industries and the removal of trade barriers created an outflow of money-a 'balance of payments deficit'-so gargantuan that monies due were nearly 10 times greater than the cash available to pay them. The plunder had left nothing standing behind the national currency.

Yet the solution offered to the crisis caused by plundering Mexico is... deeper plundering of Mexico. Billions in tribute will be sent to the North for the right to pay onerous interest on massive new loans. All revenues from oil reserves-the last jewel in Mexico's crown-will be sent directly to Wall Street. …

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