Peso Crisis - IIReactions from Wall Street

& Mexican Govt Actions

Wall Street Bloodthirst--the Chase Report

• Jan 11: Riordan Roett at CSIS Seminar says Mex govt must “resolve” Chiapas conflict to regain investor confidence

• Jan 13: Roett’s Report to “Emerging Market Investors”– Mex govt must “eliminate” the Zapatistas– Mex govt should perhaps commit election fraud– questions how much pain Mex “working class” will take

Chase Report Revealed

• Feb 1: Counterpunch publishes story on Roett/Chase report & Roett’s talks

• Feb 10: Counterpunch faxes Cleaver who puts story on the Net

• Feb 14: Cleaver posts entire Report on Net• Feb 14: Perot et al pick up story & spread it

• Feb 14: Chase denies responsibility, blames Roett (and subsequently fires him)

• Feb - March: Anti-Chase demos E & W

Reaction in White House: BAILOUT

• mid-Jan ‘75: faced with peso crisis & threat of more general financial crisis, Clinton asks Congress for bailout legislation, wants $40b

• Old NAFTA lobby mobilized on Hill• Jan 31: as Congress stalls, Clinton acts:

– $20b from US Exch.Stabilization Fund– $17.8b from IMF, biggest IMF loan ever– $10b from Bank for Int’l Settlements

• Bailout not of Mexico, but of speculators

Terms of Bailout

• Pledge of oil reserves as collateral• Tight money policies raising interest rates• privatization, sell off Mex firms, 100%

foreign ownership• G, decreased govt spending, esp. that

supporting consumption, wages• Stiff fees for borrowing• In short: dramatic austerity plan for Mex

Results in Depression

• All these measures produced a deep depression in Mexico, – a fall in GNP (total output)– dramatic layoffs– rising unemployment (100s of thousands)– bankrupcy for many firms

• Most dramatic economic crisis since 1982 debt default

Political Dimension

• Economic austerity accompanied by just that police and military repression called for in Chase report

• Mexican govt:– unilaterally broke of peace talks– sent 50,000 troops against Zapatista

communities in Chiapas– arrested people accused of being Zapatistas,

some released, some sentenced, e.g., Elorriaga

Arrests

• Those arrested were tortured:– tied, blindfolded & beaten– stripped naked, pawed, threatened with rape– electro shocked– kicked– pistol whipped

• All this documented by human rights groups & defense lawyers with doctors

In the Countryside

• People in “Zapatista Zones” fled into the mountains to avoid torture, rape & murder they had experienced a year before

• Flight into mountains & jungle brought sickness & death– dehydration, malnutrition, salmonella,

diarrhea, sunstroke, bloody swollen feet, cholera, etc

• Military wreaked havoc in villages

Economics & Politics

• “Economic austerity” & “political repression” revealed as two forms of same thing

• Economic austerity originated in political crisis of which peso devaluation was byproduct

• Both austerity & guns aimed at attacking those responsible for instability (workers & peasants)

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