Zedillo’s Financial Package

MEXICAN PRESIDENT ERNESTO Zedillo has accepted the package of loan guarantees to rescue the peso, organized mainly by the U.S. government. This means that, in exchange for the loan of $51 billion, Zedillo agreed to follow precisely the same policy which led us to this disaster: reduction of the state budget.

It’s difficult to imagine reducing the social budget in a country like Mexico, where the private sector is being crushed under too high interest rates and devastated by internal and international debts (which have doubled with the peso’s devaluation last December).

Experts who have studied the negative consequences of the neoliberal policy in various countries have concluded that only the government can provide a way out of the crisis because only it can find the capital to keep production going, the employment rate up, and thus to stimulate the market. And among these experts are the conservative economists of the University of Chicago, who recently wrote that economic development, without exception, needed state protection because only under these circumstances does growth and commerce increase.

The question arises: Why have the U.S. government and the financial institutions organized this package, even against U.S. public opinion and against the majority in Congress? Two American intellectuals who generally do not agree in their views of the world — Noam Chomsky and Kenneth Galbraith — arrive at the same answer.

In Galbraith’s words, “The Mexican crisis is the product of the rich people’s madness.” In Chomsky’s, “This package for Mexico has been precisely designed to protect the rich from the market’s discipline.” Over the last few years, Chomsky explains, both Wall Street and Salinas’ friends “bought Mexican public resources for nothing, for a few pennies. But they knew all this was fraud, all this was built on sand, and now they are against the wall. So the public has to rescue them.” (“El paquera para proteger a los ricos,” La Jornada, February 3, 1995)

By accepting this package, Zedillo is accepting the imposition of humiliating conditions: Mexico must sell its last public resources, mainly oil — the last possibilities of independence — for less than nothing.

On March 7, the Mexican Congress (in which the PRI represents the absolute majority) voted yes to the financial package. President Lázaro Cárdenas, who governed Mexico between 1934-40 and who undertook the historic step of strengthening our national sovereignty by nationalizing the oil, must be twisting in his grave.

ATC 56, May-June 1995