E N D P I E C E
The New Conquistadors
The evaporation of an economic model in Mexico shows that ‘emerging’ countries are not
waving but drowning, argues Steve Eckardt.
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 élite, 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. And the common people will draw their belts several notches tighter – if they have belts to tighten.
However bloodied from the recent débacle, US capital is gripped by the relentless demands for profit – despite knowing that another disaster looms. There are, according to a Chicago Tribune editorial, ‘deep concerns about whether... Mexicans will accept a lower standard of living without political or social protest’.
The peso’s collapse coincided with the effortless taking of towns and cities by the Zapatista rebels in the southernmost state of Chiapas in mid-December. Despite the overwhelming presence of a quarter of the Mexican army, the rebels were able to seize territory and disappear without a single casualty. Strikes and major demonstrations have met the new demands of the deepening Conquest, especially following the Government’s massive – yet abortive – military operation against the Zapatistas in February and March.
The press coverage in the US has all but disappeared. Yet even the most optimistic economists promise nothing more than ‘a very bad year’ for Mexico. A profound structural weakness in existing economic relations has been uncovered. Driven by a classical ‘crisis of over-production’, the nations of the First World are impelled into ever-fiercer competition for inadequate – indeed shrinking – markets. Within their own countries, rulers target the social benefits and democratic rights of the working classes to gain competitive advantage.
Simultaneously the imperial powers bulldoze headlong into the Third World, seizing markets and enforcing austerity – thereby freeing up cash for export to the North and lowering labor costs for their burgeoning Southern production facilities. In short, precisely the road demonstrated by Mexico to lead to disaster.
Perhaps it is time, finally, to write off the whole idea of ‘emerging’ economies. For despite the pursuit of every conceivable avenue – Islamic fundamentalism (Iran), reformism (Haiti), Stalinist Luddism (Cambodia), low-wage authoritarian state capitalism (South Korea and the other ‘Asian Tigers’), exceptionalism (the vast populations of China and India, the oil reserves in the Middle East), and countless cases of toadyism (Poland, Egypt, Mexico) – not a single Third World nation has so far ‘emerged’ into the First. In fact the Third World is not emerging at all: it is, like Mexico, submerging.
Steve Eckardt is a Chicago-based freelance writer specializing in Mexico and is a regular contributor to India’s news weekly New Wave.
©Copyright: New Internationalist 1995