Acting in secrecy, and without leave from the Mexican authorities, the US Justice Department organized a “sting” operation on Mexican soil which resulted in the exposure of at least 26 bankers and other Mexican officials for money laundering practices which are contrary to both Mexican and US laws.

The Mexicans, predictably, reacted with indignity, condemning this as a territorial violation and pointing out that stings are by Mexican law illegal entrapment. Attorney General Janet Reno and others in the Clinton administration immediately started to backpedal and apologize, while nonetheless maintaining that they got the buggers fair and square.

From news accounts, press leaks and other sources, it appears that for the last three years, federal agents, posing as drug money launderers, have been investigating Mexican bankers who, contrary to Mexican law, but not — according to some economists and law enforcement officers in Mexico — contrary to custom, have been acting as conduits for the Cali and Juarez cartels for a 1% fee.

The indictments handed down in mid-May were served on many defendants who were “lured” (Dept of Justice language) onto US territory. Five of the major Mexican banks were named and some of the US assets of these banks seized. None of the banks seemed very upset by the seizures, which one banker described as less than critical.

On May 21, President Zedillo ordered the Mexican embassy in Washington to deliver a formal protest to the US government for violation of Mexican sovereignty. So far, five actual bankers have been arrested, and Attorney General Madrazo announced that the agents of the US government who carried out the operation appeared to be in violation of several Mexican laws and that an investigation has been initiated that could result in arrest and prosecution of some agents.

Meanwhile, Janet Reno held a press conference in which she denied targeting the Mexican banking system and said that “only three” banks were in danger of prosecution (along with 26 bankers that were “charged”). She pointed to another case, involving some Venezuelan bankers, as proof that Mexico is not marked for special (negative) treatment.

What is really rankling President Zedillo is that no-one — not him, nor any single individual in the Mexican law enforcement system — was informed of the ongoing investigation. The inference is clear: the US team didn’t trust anyone in Zedilo’s government not to tip off the narcos. In spite of all the rhetoric about new cooperation and Mexican progress in reducing corruption, nobody on the US side believed anyone in Mexico to be uncorrupted.

This is a problem that will not go away any time soon. As late as Friday the 29th, Rosario Green, the foreign secretary, was calling for a “code of conduct”, in writing and with built in sanctions for violation, covering US / Mexican relations, and calling the conduct of US agents “immoral”.


Starting today, I will be serializing our trip, just completed. The first installment follows:

OAXACA: Left at 11:15 pm, and trip on ADO Plus was totally uneventful.

MEXICO: Arrived in Norte station and an hour later, we were out on the Futuro to Guadalajara. Futuro, along with almost every other bus line that goes north and west from Mexico, is a subdivision of transit megacompany Estrella del Norte. Among the “first class” buses in this area of Mexico, only Primera Plus and ETN appear to be independent. This integration of services is made doubly clear when you go to the Elite, the Futuro, the Executivo, the ABC, and the Estrella Norte counters, and all seem to be running the same bus schedules. When the clerk puts the time, day, and route into the computer, the computer puts the name of the line on the ticket. On these lines, you must remember to ask if the ticket you are buying is “directo” (non-stop). We thought we were going straight to Guadalajara from MexCity, but there was a stop in Querretaro (about 15 minutes). The bus you take from Guadalajara to Mazatlan can have one, two, or three intermediate stops, all at the same first class price.

Also, on many routes, only overnite buses are non-stops; daytimers will likely have stops.

Another thing I have noticed: more and more, and especially on this trip, the films that used to be in English with Spanish subtitles are dubbed.

GUADALAJARA is suffering from the same heat wave that is gripping Oaxaca and most of the rest of the country. Still, the few degrees lower temperature (around 93) is welcome.

Stayed our first night in the Posada Regis, a very old 2d floor hotel that is harder to get into than Fort Knox. There is an electronically operated grille gate at the top of the stairs, and nobody gets in without plenty of scrutiny from the desk person and Ninja, the fierce-voiced two-pound miniature cockapoo guard beast. At 160 per, double, it is on the low end of hotel rates in the downtown area, and from that standpoint is probably a good deal. It is clean, the water is hot, but the rooms are not well ventilated and there is no fan.

Second night was spent in the Hotel Universo, a modern cube of no redeeming architectural value. For 210 pesos, we got a king size bed (the matrimonios were all taken, at 190 pesos), a shower that is separated from the rest of the bathroom, and central air conditioning that actually keeps the room cooler than the outside without getting too cold.

At first impression, Guadalajara is dirty, down at heels, and does not show off it’s fine old buildings to advantage. The smog is big-city bad.

Second impression is much different. Yes, it’s smoggy, and yes it’s a little dirty, but there is a nobility in the architecture and the parks. Seldom have I seen more sculpture in any Mexican city center. And I don’t mean statues of historical figures, although there is plenty of that. I mean bas relief on buildings, fountains in modern designs, and an iron bandstand that is outstanding during the day and even more striking when lit up at night.

The Mercado Libertad is truly vast, and the food courts are the cleanest and have the most variety of any market I have seen. Built of brick, on three levels, it is a market for all seasons. While its size is impressive, the amount of local artesania is miniscule compared to Oaxaca. This is probably because there is a much smaller variety of local artesania available in the Guadalajara area.

The Tapatia is a walking street, but unlike Oaxaca has no important landmarks once you have passed the first block from the west (the Halls of Justice) until you come to the Instituto Cultural de Cabañas at the east end. On the other hand, you can buy linoleum, tv’s, dress materials, or eat a good meal along its’ length, and tourist traps are at a minimum. Many of the aforementioned statues and sculptures are interspersed along its length, along with fountains and benches.

Even if the Tapatia were totally without redeeming artistic or social value, it would still be worth walking just to get to the Cabañas, and the Orozco murals in the chapel of this colonial-style building which up until about a decade ago was the state orphanage.

Just past the west gate to the Tapatia is a whole complex of state, municipal and private buildings of colonial origin or flavor, housing bureaux, museums and churches, interspersed with parks. We visited the Cathedral, surprisingly un-gilded, and the Regional Museum. The museum holds a display of the earlier works of Sergio Bustamante. In the arcade on the ground floor are wonderful whimsical figures formed of various materials. On the second floor there are giant canvases, many of which include a figure from the downstairs display, and almost all of which are painful and grotesque.

On our last full day, we were picked up at our hotel and joined for lunch by David and Dona McLaughlin, our webmaster and his wife. After a very pleasant lunch at La Pianola, near the University, they drove us out to their house in Ajijic, where I attempted to pick up my email using my computer, ran into compatability problems with their server, ended up taking over David’s partner Camille’s computer for a few minutes, and generally disrupted their lives. Their generosity and patience was freely given and greatly appreciated.

We ended the day with an adventure bus ride, Ajijic back to Guadalajara by second class transport.

Our last two breakfasts in Guadalajara were spent in the coffee shop of our hotel, which featured a buffet including paella, a spanish souffle, chilaquiles, and other goodies, complete for 35 pesos.


Having been predicting a 9-to-one peso/dollar ratio for a couple of years now, it looks like I may soon be vindicated. In a way, I feel like a Mexican driver, stuck in traffic, honking his horn, and convinced that by doing so he made the traffic move. In fact, it would appear that the recent big drop in the peso happened for both logical and illogical reasons. The illogical but probably, given human nature, most telling influence, was the general fear among “money people” that the Asian currency collapse would spill over into latin america — even though Mexico appears to have little of its own assets anywhere near the debacle.

The logical, and given human nature, probably the least influential reason, is the unfolding of a banking debacle in Mexico that makes the S&L bailout look like tiddly winks. It now appears that the Mexican banks may be in the hole for bad loans totalling well into the 100 billion dollar level. In a country that already pays something on the order of 1/3 of its gross national income in debt service, the FOBRAPROA (stands for something like the Resolution Trust that oversaw the S&L bailout) is beginning to admit that the money for the rescue effort can’t be put together.

As things unravel even further in the next few months, and the big money boys in Mexico shrug their shoulders and dump their pesos for nice, steady Swiss francs, a repeat of the 1994/95 collapse is not without the realm of possibility.