1996-11-20 Local Press

Summary of Local Press Clippings from Mexico

November 20, 1996, Credit Lyonnais Securities (USA) Inc.

DEMOCRACY

PRI Approves its own Reforms: Breaks Agreements

On November 14, the Institutional Revolutionary Party (PRI)-dominated Congress passed its own version of an electoral reform over the objections of the three opposition parties represented in Congress. After close to two years of negotiations between the government and the opposition parties, the PRI bench in the House of Representatives backtracked on 16 agreements reached during the negotiations In addition, they approved their own proposal for public financing of campaigns, which was about double the amount proposed by the opposition (see our comments from last week). One member of the PR' argued for reaching a consensus, but his fellow party members screamed insults at him and moved his seat to the opposition section of the House. (La Jornada, 15 November)

Zedillo Says Reform is Definitive; Opposition Disagrees

In a private breakfast with The Economist Conference, President Zedillo said that the electoral reform approved by his party in Congress last week is "definitive" and that there will not be another one during his term. Opposition party leaders disagreed however. National Action Party (PAN) leader Felipe Calderon said that this was a "transitional" reform, and it was up to Congress, not the Executive branch, to determine if there will be further reforms. Party of the Democratic Revolution (PRD) leader Andres Manuel Lopez Obrador called for a re-initiation of the national dialogue in order address key issues that were not addressed in this "partial" reform. (Reforma, 16-17 November)

PAN National Convention

The conservative PAN held its 42nd National Convention this week, in which it worked on its strategy for the 1997 mid-term federal elections. The party claims that it now governs 33 million people in Mexico (over one third of the population). Party leader Felipe Calderon said that candidates for 1997 should be "the best woman or the best man" for the job, regardless of whether they are party activists. This is quite different from the PR' Convention, in which the party approved strict conditions for potential candidates - including at least ten years of party activism.

The PAN Convention also approved a legislative platform for 1997-2000, which Calderon said brought them closer to their goal of being a "centrist" party. In addition, the Convention agreed that the party would fight to reduce the value added tax from 1.5% to 7%. and for a new law governing the media (the current law dates back to 1917). The PAN is expected to chose its candidate for the new coveted office of Governor of the Federal District in February. (Reforma. 18 November).


Newspaper Director Jailed in Nuevo Laredo

Ninfa Deandar Martinez, the Director of the daily "El Manana" in Nuevo Laredo, was detained for five hours on November 13 after having been accused by the Mayor of damages, libel and defamation. She was released after posting a bond of 10,000 pesos (about $1,300). The Mayor of Nuevo Leon accused the editor and her staff after the paper published an article saying that the Mayor was addicted to tranquilizers. The editor also regularly refers to the fact that the Mayor is the Governor's mistress, and that is how she got to her post. Upon her release, Deandar Martinez said that her experience "gives readers a sample of the outrages acts continually committed by bad governments". She blames her persecution on the governor. (Reforma. 14 November).


 ECONOMY

Private Sector Considers Government Forecasts "Very Optimistic"

Spokespeople for private business associations in Mexico said that the government's forecast of a .5% public deficit and 15% inflation for 1997 are "very optimistic". They argued that the government's recent about faces (both on the issue of privatizing petrochemicals and on electoral reform) will slow national and foreign investment, making it very difficult to achieve the government's economic goals for 1997. Hector Larios Santillan, the President of the Business Coordinating Council (CCF) said that the goal of increasing tax revenues by 10% in 1997 does not correspond with overall economic forecasts for a slow economic recovery in 1997, He said that, in the best of cases, GDP growth will be 4.2% in 1997 and inflation 17%. (El Financiero. 19 November).

Monopolies on the Rise

 During the past year, monopolistic practices in Mexico grew 56.3%. according to the Federal Competition Commission (CFC). Among the principal cases are American Express and Visa, as well as the alliance between Medom and Tolevisa. The Commission also noted that, as a result of the globalization process. 16 national firms have become multinational corporations. El Financiero, 19 November)


 Subsidies to Parastata is to Increase 79.8% in 1997

Federal government subsidies and transfers to public sector businesses will increase 79.8% in 1997. This means an increased from 19.668 billion pesos to 35.371 billion pesos. The largest portion of these subsidies (18.238 billion pesos) will go to the Mexican Social Security institute (IMSS) to prepare for the privatization of the pension system. (La Jornada, 15 November)

Public Debt Up 1.3%

Mexico's public foreign debt increased 1.3% during the third quarter of 1996, to reach a total of $99.722 billion dollars. This is the equivalent of about 30.5% of Mexico's annual GDP, or the total value of its expected exports in 1996. (El Financiero7 19 November).


 Nonexistence of Ranks Under Investigation

The Supreme Court is studying documents showing that ten Mexican banks legally do not exist, because they were privatized outside of the period established by law to do so. In a case in Baja California a couple of weeks ago, a judge ruled in favor of debtors who had argued that the banks were not legally established. Under the Salinas de Gortari administration7 Congress set a 360 day limit for the privatization of banks. Salinas later issued another decree extending the time period, because they had not been privatized in the allotted time. It appears that it was not legal for the President to issue decrees of this nature, and thus, the banks privatized after the allotted time are legally nonexistent.

This has caused a wave of panic among bankers, and hope among debtors who have been fighting the banks for two years. Emiho Krieger, the President of the National Association of Democratic Lawyers, said that it is clear that the decree issued by Salinas was illegal. The question is, what will be done about it? (La Jornada, 15 November)

Car Thefts a Lucrative Business

The number of car thefts in the Federal District rose from 29,342 in 1994 to 56,498 in 1995, an increase of 38%. Officials estimate that the these cars are worth an average of 2.5 billion pesos (320 million) per year. After drug trafficking, car theft is the most lucrative criminal activity in Mexico. (Reforma, 16 November). 


 CHIAPAS

Constitutional Reforms Expected

Zapatista Army of National Liberation (EZLN) Sub-Commander Marcos said that the inclusion in the Constitution of the San Andres agreements regarding indigenous rights is "fundamental" to the dialogue process and to the future of the EZLN. He said that "Mr. Zedillo has an opportunity now, together with the Legislative branch, to pay a debt to indigenous communities throughout the country" through a constitutional reform and a reform of secondary Jaws and institutions that would radically change the relationship between the nation and indigenous people." He said that December will be a "definitive" period regarding the future of the EZLN.

When asked about the Popular Revolutionary Army (EPR), Marcos said that they have "had military success, but we don't see that it has had an impact on the political life of the country," which is what is most important to evaluate. (La Jornada, 15 November).

Mobilizations in Chiapas to Demand Elections

Members of the PAN, the PRD and civil society in Chiapas began to organize a campaign to demand that gubernatorial elections be held in 1997, along with Congressional elections. These groups argue that it would be unconstitutional for Congress to re-elect the interim governor, Julio Cesar Ruiz Ferro when his (or the former governor's) term expires on December 8. (La Jornada, 15 November).

EZLN Celebrates 14th Anniversary

On November 17, the Zapatistas celebrated the 14th anniversary of their formation as a clandestine army in 1982. They celebrated as in the past two years, with a dance and a cultural event in La Realidad. (Reforma, 17 November). 


This report was prepared by Credit Lyonnais Securities (USA) Inc. The information and statistical data herein have been obtained from sources we believe to be reliable but in no way are warranted by us as to accuracy or completeness. Returns set forth in this report are estimates based on internal assumptions, and any changes in these assumptions may have material impact on such estimated returns. This is not a solicitation or any offer to buy or sell securities. We, our affiliates, and any officer, director or stockholder or any member of their families, may have a position in and may from time to time purchase or sell any of the above mentioned or related securities.