Jan 18, 2017

Mexico destabilized by economic pressures, dysfunctional politics

Gas price hikes spur protests in Mexico. (Reuters photo)

Peña Nieto: Mexico's
 Golden Goose is Dead
Economic stress destabilizes U.S. neighbor
By Kent Paterson/Correspondent
Jan. 18, 2017
In the biggest surge of mass protest since the forced disappearance of 43 Ayotzinapa college students back in 2014, outrage over higher gasoline prices and related issues sweeps Mexico.
Detonating the citizen uprising is a 20 percent price increase rolled out Dec. 27, 2016 by President Enrique Peña Nieto administration. Though Mexicans were immersed in the holiday season, protests began almost immediately but really picked up steam after the new year kicked in. 
Grabbing media attention was a wave of apparently organized lootings, especially in the states of Nuevo Leon, Mexico and Veracruz, where mobs made off with electronics products and assorted other items from Walmarts, pawn shops and other high-profile commercial outlets, as if a late-arriving, naughty Santa had roared onto the scene.  Still unverified reports tie the looting to organized crime or government officials, evidenced in part by accounts of police standing by while stores were sacked and videos of looters boarding waiting buses. 
Despite hundreds of arrests, it has not been publicly revealed who were the intellectual authors of the looting. A recent precedent for mass looting in Mexico occurred in Los Cabos, after a hurricane slammed the tourist resort in 2014.   
Yet media focus on the lootings initially overshadowed a more sober response to the so-called "gasolinazo" of Dec. 27, summed up by the popular slogan "I protest, not loot." 
According to Mexican press accounts, tens of thousands have staged largely peaceful but militant protests in at least 28 of Mexico's 32 states. However, five deaths have been attributed to confrontations, including the killings of two young men allegedly shot by police in the state of Hidalgo. In addition to tossing out the gasoline price hike, demonstrators demand the exit of Peña Nieto, who still has nearly two years left of his term.
The Rev. Alejandro Solalinde, a Roman Catholic priest and internationally respected human rights defender and migrant advocate, led one march on Jan. 7, 2017 in Mexico City.
"There is hunger," Solalinde was quoted as saying in Mexico's daily La Jornada. "The people are electrified and very sensitive. For example, in Hidalgo, the multitude drove off police cars with rocks. Society is very desperate up against a political class so corrupt, so insensible and so blind that it does not calculate the dimension of the social upheaval."
Solalinde urged the creation of a new citizen assembly and a new national constitution.
"We are not only asking that Peña Nieto leave. We want the overturning of all the structural reforms and seek the cleansing of the political parties. The citizens are becoming more conscious, they have awoken and we are organizing in response," Solalinde said.
The Peña Nieto administration justifies the gas price hike as a bitter but necessary step brought on by expensive, soaring gasoline imports (Mexico now imports more than half of its gasoline from abroad, chiefly the United States, according to Peña Nieto), sharply declining national oil production, and the inequity of subsidizing better-off drivers at the expense of the poor, whose social programs could be cut further if gasoline prices aren't raised.
Reduced tax revenues from less and cheaper oil already netted federal budget cuts to the Social Development Secretariat in 2015 and 2016, including an 8.6 cut the first year and a 2.3 percent reduction in the second one, according to Proceso magazine.  
"The goose that laid the golden egg is dead," Peña Nieto recently said on national television, adding that oil production at Mexico's key Cantarell field plummeted from 2.2 million barrels per day six years ago to only 200,000 today.
Availed by the Organization for Economic Cooperation and Development as a prudent measure, the 20 percent gas price hike is rejected by many if not a majority of Mexicans who point the finger at decades of corruption, disinvestment in the Pemex national oil company and the 2013 energy reform pushed by Peña Nieto and approved by the Mexican Congress, a law which opened the door to liberalized gas prices and foreign ownership of fossil fuel resources and gasoline distribution.
Higher local gas prices are adding another drain on Mexican revenues. Many Mexicans who live near the U.S. border and possess authorization to visit the United States are coping with the crisis by hopping over to El Paso, Texas, and other U.S. border cities and filling up their tanks at half the price they pay at home.
The international flavor of the gasolinazo was visible during a visit last month to Juarez, Chihuahua, where a long line of cars and trucks headed to El Paso stretched from the foot of the Paso del Norte International Bridge deep into downtown Juarez. Predating the price hike announcement, the scene nevertheless unfolded amid reports of gas shortages and the pending increase.
While Mexican drivers waited for hours to enter the U.S., the money exchange houses lining Avenida Juarez alongside the idling vehicles advertised a falling peso and a climbing dollar, graphically depicting the direction money is flowing across borders. As the peso drops, more dollars must be paid to procure U.S. gasoline imports. 
New Popular Movement Rises
January's protests have continued daily in one locale or another, sometimes featuring citizen blockades of ports, border crossings, gas stations Pemex (Petroleos Mexicanos) installations, and highways. At a Jan. 10 rally in Mexico City attended by thousands, effigies of both Peña Nieto and U.S. President-elect Donald Trump were burned. 
Several distinct but sometimes overlapping sectors are represented in the protest surge: well organized labor, farmer and popular groupings; university student associations; opposition political parties; and localized, emergent citizen forces who are quick to distinguish themselves from political parties or even the long-established social movements. Whether big or small, demonstrations are flourishing across the land.
In Puerto Vallarta, Jalisco, a small group staged a march on Jan. 14. The action was organized by Colosistas Unidas, named after Luis Donaldo Colosio, the presidential candidate of the ruling Revolutionary Institutional Party (PRI) who was assassinated in 1994 and had a reputation as a social justice advocate. Following behind a sound truck with a speaker spitting thunder and fire to the backdrop of the Mexican national anthem, protesters held placards with messages that included "Resign Peña" and "Our children want a better future."
The orator, Juan Villanueva, insisted that the gasoline crisis was the "final insult to Mexicans." In an interview, Villanueva said he had been a personal friend of Colosio and suffered jail and death threats for his activism throughout the years.  
"We are fed up with high-level corruption, impunity. (Government officials) are like mafias. We can't tighten the belt any more ... we don't want violence, and we don't need it. There are many of us looking for peace but without progress."
Making their way into the downtown tourist zone, the marchers drew mixed reactions. While some locals and tourists looked surprised, others honked their horns or clapped. Passing a private high school, the marchers were greeted by visibly elated students peering out from the second floor who shouted, "Out with Peña" and the Barack Obamaesque "Yes, we can!" At one point, a female transit cop began photographing the marchers but was interrupted by a woman with an apparently unrelated issue.
Reluctant to be identified, one woman marcher nonetheless told the reporter that she feared what officials allegedly had in store for Mexico. "They want a military dictatorship. They want to militarize the streets. That's not right because it’s against human rights."
Villanueva warned that the gas price hike will trigger a "cascade" of price increases of other products by February. The press is full of stories of scattered increases across the Republic, including intercity bus and Uber fares in Mexico City, fruits and vegetables, and staple tortillas which are reportedly fetching as much as 20 or 25 pesos a kilo in parts of the country, an amount equivalent to about a quarter of the daily minimum wage.
According to a projection by Scotiabank cited by La Jornada, Mexico's inflation rate for January alone will tip 1.4 percent and reach 5.5 percent for the entire year.
On Jan. 15, hundreds marched in Puerto Vallarta demanding Peña Nieto's ouster and the cancellation of the 20 percent price hike. Organized by a new collective, Vallarta Unida (United Vallarta) and other groups, protesters burned effigies of local political leaders they said supported the gasoline price increase and addressed a large crowd assembled to watch the nightly clowns who perform on the boardwalk. Multiple issues boiled up during the protest, including the widespread problem of forcibly disappeared people, possible water privatizations and political dysfunctions of all kinds. 
Demonstrators called for tax resistance, defunding political parties they maintain suck up public monies and turning up the heat on a political class  blamed for looting the national patrimony. "Where are the golden eggs?" questioned marcher Aldo Alberto Hernandez. The Puerto Vallarta resident voiced a complaint familiar in the U.S., taking a jab at high payroll deductions and the 16 percent VAT (value added tax) Mexicans must pay.
"There are too many taxes," Hernandez contended.
"Corruption and impunity go hand in hand, like boyfriend and girlfriend," Villanueva said, adding that public tarring and feathering of responsible officials is one answer.
The activist said the protest movement is committed to the long haul. "This isn't a question of one day or a little while," Villanueva said. "It will be permanent until the people of Mexico triumph … as Don Miguel Hidalgo (the acknowledged father of Mexican independence) said, ‘enough is enough.’”
Local politics stoke protests
Besides pain at the pump and sticker shock in the aisle, an overflowing basket  of grievances is fanning the tenor and tone of the protests. A mass demonstration Jan. 5 of an estimated 20,000 people in Monterrey, Nuevo Leon, was preceded by weeks of swelling anger over the failure of Governor Jaime "El Bronco" Rodriguez to toss out a vehicle tax he earlier pledged to cancel. During the protest, calls for Rodriguez's ouster joined the demand for Peña Nieto's early departure. The demonstration culminated in a violent confrontation between a shadowy bloc-like group and police.
Subsequently, Rodriguez modified a tax increase and vowed that the ticket prices for public transportation in Nuevo Leon would not go up. In Baja California, more than 10,000 people were reported at a Jan. 12 demonstration in the state capital of Mexicali that opposed not only the gasolinazo but also a new state water law portending privatization which passed the state legislature only days before Christmas. Internationalizing the angst, one demonstrator burned a U.S. flag.
On Jan. 15, as many as 80,000 people reportedly turned out for demonstrations in Tijuana, Mexicali and other Baja California cities. Demonstrators renewed a call for Peña Nieto and Governor Francisco "Kiko" Vega to step down, and raised a host of other issues including feminicides, farmworker and maquiladora wages and fishing restrictions in the Sea of Cortez. 
The popular movement chalked up its first victory when Governor Vega announced Jan. 17, with the support of state lawmakers, that he would abrogate the new water law and cancel planned rate hikes.
Neighboring New Mexico and Texas, the city of Juarez and the state of Chihuahua have witnessed numerous protests. The gasolinazo put a new governor, Javier Corral, in a proverbial political pickle. A member of the conservative National Action Party (PAN), Corral assumed office last October amid a debt crisis handed to him by outgoing Governor Cesar Duarte and renewed bouts of narco violence.
Corral won election by reaching beyond the PAN's normal base and enlisting diverse political forces into a "citizen" crusade to rescue Chihuahua from disaster. He campaigned as a champion of human and women's rights, and promised to enact social reforms benefiting the poor.
Accordingly, Corral named several veteran leaders of Chihuahua social and political movements associated with the left to state government posts, including former congressman and rural leader Victor Quintana as state social development director and Chihuahua City lawyer and women's activist Lucha Castro as the governor's human rights advisor. 
The January police eviction of protesters from a Pemex facility tested Corral's public image and government. The new governor was suddenly under pressure from maquiladora (assembly plant) and other business interests complaining of supply shortages and delays caused by the protests while facing possible repudiation by his base for any repression of the new popular movement. 
Rumors flew that unnamed left members of Corral's government would tender their resignations, perhaps dashing the possibility for reforms only three months into the new administration. So far, nobody has quit but the political climate in Chihuahua as well as elsewhere in Mexico remains testy.
State and local governments are scrambling. In Jalisco and other states, governors have unveiled new policies aimed at cushioning the effects of the gasolinazo and ranging from austere personnel rules to keeping the lid on city bus fares, at least for now.
Lay-offs and local tax breaks for companies and citizens are likewise in the works. Twenty four Jalisco municipal presidents representing the Citizen Movement party, including the mayors of Puerto Vallarta and Guadalajara, have filed a lawsuit against the gasoline price hike on constitutional grounds, the Reforma news agency reported. 
Claimed as a countermeasure to the admittedly negative impacts of the gasolinazo, the Peña Nieto administration announced Jan. 9 a new national agreement supported by the Business Coordinating Council and the PRI-linked Mexican Workers Confederation. 
Similar in some respects to new policies unfolding at the state level, the federal pact seeks the streamlining of  government, modernizing public transportation, facilitating business credit and incentivizing the repatriation of the billions in Mexican capital squirreled away in the United States and other foreign nations.
Significantly, the Mexican Employers Confederation declined to jump aboard, criticizing the agreement as lacking specifics, and members of the influential Mexican Governors Association, including Chihuahua's Javier Corral, complained they were not consulted beforehand.
Given all the dynamics, it's too early to assess the full implications of emerging new policies on the nature and viability of both the Mexican economy and state, but they could be considerable. One thing is for certain: the gasolinazo is scorching and reshaping the terrain for the 2018 presidential and congressional elections.
Meanwhile, the burgeoning popular movement is planning more mobilizations in the days ahead, including blockades by the farmers’ organization El Barzon and allies of Mexico-U.S. border crossings on Jan. 20, the day of Donald Trump's inauguration as the 45th U.S. president.
Mexico's changing world scene 
The Dec. 27 gasolinazo cannot be divorced from other events and factors that are serving to destabilize in the status quo in Mexico, including Trump's imminent arrival to the White House, the U.S. president-elect's Twitter broadsides that produce jitters to the value of the peso, which plunged to a new low of more than 22 to the dollar recently, and forecasts of lower-than-expected growth for 2017. Perhaps capturing the national mood, Proceso newsweekly splashed a picture of Trump on the cover of this week's edition with the words "The war that's coming."
If the United States suffers a narco-dependency on the south, Mexico is afflicted by economic dependency on the north. In different government, academic and popular spheres, talk is growing of reclaiming Mexican sovereignty and diversifying economic relationships. Even Peña Nieto is turning his gaze away from the north.
In a recent speech to Mexican diplomats broadcast live on national television, the beleaguered president defended the North American Free Trade Agreement (NAFTA) attacked by Trump but also stressed developing greater ties with the Asia-Pacific region and the Persian Gulf states whose sovereign nation funds the Peña Nieto administration is cultivating.
More than 35 years after the Mexican oil boom of the Lopez Portillo years intoxicated the country, Mexico stands at a crossroads. As the public indignation intensified over the gasoline price hike, Proceso reprinted an interview it ran back in 1980 when bubbles of black gold promised a new source for national investment and development. The interviewee was the late Nobel-winning economist Lawrence Klein, who urged Mexico to follow the path of Norway in developing its energy reserves with "moderation" and not let "social problems to spin out of control."
Klein warned of alternative scenarios in oil rich economies like Venezuela and Iran that were creating great breaches between the rich and the poor, as well as fomenting conspicuous consumption and corruption. 
"People take to the streets and shout their demands," Klein told Proceso. "They demand everything. Corruption in different social levels winds up generating revolutionary movements." 
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Correspondent Kent Paterson is a veteran journalist and author and an expert on Mexico and the border.