The Mexican army, crack federal and state police units, and private goon squads combined forces in early February to evict chemical and petroleum workers in the state of Tabasco, who had been blockading access to wells and storage facilities owned by Petroleos Mexicanos (Pemex). The reason given for using clubs, tear-gas and dogs, against unarmed peaceful protesters, was nothing less than Preservation of The State, thus elevating to the highest levels of patriotic duty, the need to produce oil revenues for repayment of the recent U.S.-led bailout of the peso.

During the Presidency of Lazaro Cardenas (the father of the present-day opposition leader Cuahtemoc Cardenas), in the 1930’s, several of Mexico’s industries were nationalized. Included were the railroads (Ferocarrillos Mexicanos Nacional: FMC), the major seaports, Telefonos Mexicanos (Telmex) and Pemex. Subsequent Presidentes, up to and including Carlos Salinas de Gortari, pointed with pride to these “national treasures” : symbols of a modern, independent Mexico, on its’ way to the 21st century. For the average Mexican, “we own it” was a tremendous source of optimism and national identity.

With the signing of the North American Free Trade Agreement (NAFTA), everything changed. The Zapatista Army of National Liberation (EZLN) came down from the hills and turned reality on its’ head by demanding that the people of Chiapas, among the poorest in the nation, be fairly compensated for the natural resources being removed from their land. Among these assets: vast reserves of petroleum. Spurred by the example cut by the dashing Subcomandante Marcos and his ski-masked companions, other pockets of resistance to exploitation flared up in Oaxaca, Guerrero, Michoacan and elsewhere. Suddenly, investment, previously based on a belief in a docile and compliant Mexico, began to flow out of the country. Mexico’s economic projections, based on steadily increasing foreign investment, succumbed to the new crisis in confidence.

In order to attract hard currency, the Mexican government was forced to raise the already-astronomical interest rate. When this strategy failed to yield the desired results, the IMF, the World Bank, the U.S. government and others declared the peso to be over-valued, and the Mexican government was forced to “float” the peso against the dollar. The resulting devaluation (about half), almost bankrupted the Mexican treasury as hard currency reserves dipped by over 80%.

Faced with imminent bankruptcy, the Mexican government appealed to its’ powerful friend to the north for funds. The response was immediate, positive, massive, and enslaving. Yes, Mexico could have a short-term loan, provided it would pledge the profits from Pemex, the only truly lucrative national industry, as a guarantee of payment. In spite of a tremendous national outcry against this move, the Mexican government agreed. The sharks began to circle, smelling blood.

U.S. communications companies began moving into Mexico. In 1995, MCI, AT&T, Sprint and others made deals with TelMex, or combined forces with other companies on TelMex’s periphery to compete with the national monopoly, and in general made TelMex’s future uncertain. Since pre-NAFTA Telmex represented over 20% of the value of the Bolsa de Valores de Mexico, Mexico’s stock exchange, many economic pundits began to fear for the Bolsa (although, inexplicably, the Bolsa kept climbing, against all expectations, until this month, when it took some serious hits).

[BULLETIN: on February 14, 1996, as this newsletter was being composed, a consortium called Global One, comprised of Deutsche Telecom, France Telecom and Sprint, announced that they had struck a deal with Telmex to integrate their international long-distance services. As part of the deal, Telmex declared that it has no “short term” plans for “an incursion into the U.S. telecommunications market”]

U.S. railroading interests, headed by Tex-Mex Railways, a combine of several midwestern and southwestern railroads, are moving in on the Mexican rail system. The government plans to scrap most of the outdated rolling stock of the FNM, and grant U.S. companies concessions to operate rail services in Mexico.

The seaports are being auctioned off, a few at a time. Concessions are being granted to U.S. and European conglomerates who have taken on Mexican “partners”.

Pemex, the jewel in the crown of Mexican national enterprise, is also on the block. In the best tradition of Ivan Boesky and other U.S. arbitrageurs, the Mexican government is “spinning off” “non-essential” divisions, into the hands of foreigners. The most serious examples are the fertilizer industry, the plastics industry, and petrochemicals.

Recently, the government announced the privatization of the three Pemex plants that produce all the ammonia fertilizer made in Mexico. Ammonia is made from methane, which is created as a by-product of natural gas processing. The largest by far of the three plants — at Cosoleacaque, in the state of Vera Cruz — produces 86% of Mexican output. The most likely new tenants are Farmland and/or Terra, both U.S. giants, probably in partnership with a Mexican petrochemical company. Mexican farmers are very worried about this development. Foreign directors operating for a profit are unlikely to care about the social costs, such as the effect of a price raise on subsistence farmers; the consequences if it becomes more profitable to export the product than to sell it on the local market; and the loss of jobs if it becomes more profitable for the company to import the product than to produce it locally. In a recent article in “The News”, columnist David Shields points out that the socially indifferent policies of foreign owners could well end up increasing the already too rapid shift of unskilled uneducated rural peasants to the shanty towns and urban decay of the large cities, as price and availability of essential fertilizers affect production.

For years, the workers at Pemex refining and storage facilities in Tabasco have been demonstrating against the environmentally destructive way in which the company is dumping toxic wastes into their backyards — literally. Water supplies are totally polluted, chemical wastes are surfacing in school yards, and beaches and rivers are awash with poisonous slime. Among the best paid workers in Tabasco, these folks are not mere malcontents looking for a higher wage. They are in fear for their lives and the lives of their children. They say that one of the reasons that the company is ignoring their concerns is that the amount of cleanup effort that would be required would cost so much that the potential foreign investors would quickly lose interest. They say that by denying any liability now — and, as has been announced, declaring that any potential buyer would be exempted from any costs of cleanups necessitated by existing conditions — Pemex hopes to get out of a bad situation with a nice cash float, while the citizens of Tabasco are left to harvest the cancers and birth defects that will be the legacy of Pemex’s devil-may-care attitude.

The workers’ unions project that “efficiencies” which would be introduced by the new owners would cost 40,000 jobs in Tabasco alone. This, they say, will leave their communities without the resources to deal with even the simplest cleanup procedures, while the owners will by law be exempted from responsibility.

Most of the petrochemical workers in Tabasco belong to the Revolutionary Democratic Party (PRD), whose chief idealogue is Cuahtemoc Cardenas, the son of the very person who privatized the plants in the first place. Under the State leadership of Andres Manuel Lopez Obrador, the workers decided early this month to take matters into their own hands. They seized a couple of dozen oil fields and storage facilities. Unarmed, and operating by sheer force of numbers, they turned off the tap. No trucks in, no petroleum out. Cardenas came to rally them, as did Party president Munoz Ledo. There were lots of fiery speeches and press coverage was thorough. Nonetheless, Pemex was hardly in any danger of losing any business, let alone being shut down: by their own estimates, they have enough refined product in storage to last for months. The real issue was one of image: the bankers, businessmen and possible investors had to be convinced that the Mexican government could deal “decisively” with dissident elements.

Starting on about the second Tuesday of February, the forces of law and order moved in. The unions, with scores hospitalized and scores more arrested, and the Gobernacion seeking an indictment against Lopez Obrador for treason, have agreed to abandon their positions in favor of “mediation” (even so, as of the 14th, over 50 sites are still blockaded). The National Interest is now equated with the health and welfare of foreign investors, and the State and its’ people no longer appear to march together toward a common future.


We were sitting in a sidewalk cafe having a beer with an artist friend from Mexico City the other night. Diana asked him if the current economic crisis had adversely affected the sales of his paintings. “Oh, yes”, he said, “Last year I didn’t sell a single painting, but this year? Ahh, this year I have sold less than nothing!”

A cartoon shows Secretario de Gobernacion (Internal security head) Chauyffet pulling up a bucket from a well labeled “Tabasco”. The bucket is full of money. The caption is “There is no value in blocking a well”.


Diana and I are off for a two week jaunt that will take us to SnCristobal, Palenque, the turquoise coast of Quintana Roo and back through Merida and Tabasco. Thanks to the generosity and insatiable curiosity of an intrepid traveler and general good guy we know, the trip will be made in the comfort and style of his van, freeing us for casual adventure and discovery. Watch this space around March 3 for an exclusive communique, and don’t forget that I’m still writing Letters From Mexico too…

STAN PREDICTS (a regular feature of the Oaxaca Newsletter):

As more trouble spots heat up, the Mexican Immigration Service will step up its efforts to identify and expel foreign human rights workers, international observers, and others who enter the country on “tourist” visas but do more than spend money. The program, which now affects every foreign visitor in Sn Cristobal, and recently resulted in human rights activists being videotaped during a sermon in the Sn Cristobal cathedral by Bishop Ruiz, is designed to intimidate. Next area likely to be affected: Chilpancingo and the altura of southern Guerrero.