1996-11-27 Local Press

Summary of Local Press Clippings from Mexico

November 27, 1996, Credit Lyonnais Securities (USA) Inc.

DEMOCRACY

Another Guerrilla Movement?

With its "Declaration from the North" a third guerrilla force announced its presence in Mexico last week. In a communiqué (which was not accompanied by military action) the Revolutionary Army for Popular Insurrection (ERIP) declared four principal demands, including agrarian form, financial and technical support for peasants, a new development model, and the creation of jobs. The new group's social base is reportedly in the areas of La Laguna (Durango and Coahuila) and the Yaqui and Mayo valleys (Sonora) in the northern part of Mexico. Analysts say that the group does not appear to have a Marxist theoretical basis, nor do they appear to have previously been involved in armed struggle in Mexico.

In Baja California, the alleged activities of ERIP led authorities to declare a state of alert in the municipalities of Ensenada, Mexicali and T'juana. In Colima, three people were arrested over the weekend, allegedly for guerrilla ties. However, the Attorney General's office later claimed that they were arrested for drug dealing. Nevertheless, the Director of Public Security in Manzanillo, Colima said that he had been told to strengthen security in public buildings and strategic points, because of a fear of guerrilla attacks. (El Financiero, 24 November).

Judge Orders Detention of Paulina Castanon

On Tuesday, November 19, a judge ordered that Raul Salinas' wife Paulina Castanon be detained on charges of giving false testimony to authorities investigating the murder and corruption case against her husband. Castanon had already fled the country, however, in fear that she would be detained. She is reportedly in Europe. On Friday, November 22, the Mexican government confirmed that it had officially requested her extradition from the European Union. However, the crime is considered minor, and therefore she would be eligible for bail. (Reforma, 20 November; El Financiero, 23 November).

Meanwhile, Raul Salinas' ex-bodyguard -who is in prison- confirmed previous testimony that he had disposed of Manuel Munoz Rocha's car from Salinas' house on September 30,1994. (Munoz Rocha, one of the alleged authors of the murder of former Institutional Revolutionary Party (PU) leader Ruiz Massieu. has been missing since September 30, and a cadaver dug up on Salinas' property several weeks ago is believed by many to be his). (El Financiero, 23 November).


IFE Approves Campaign Financing

The General Council of the Federal Electoral Institute (IFE) approved the budget passed by Congress for 2.368 billion pesos (about $3.1 billion) in public financing for political parties to fund their campaigns in 1997. The budget was approved over the objections of the National Action Party (PAN) and the Party of the Democratic Revolution (PRD), who said that such a high amount was "scandalous" in a country in crisis which can not afford the luxury of "rich parties and poor Mexicans". The PRD and the PAN are considering challenging the constitutionality of the Congressional law setting the amount of funding, which effectively limited the powers of the IFE. (Reforma, 23 November).

Official Explanation of PEMEX Explosion

The director of Mexican Petroleum (PEMEX), Adrian Lajous, said that the explosion in the PEMEX facility in San Juancio on November 11 was caused by a broken security valve on one of the tanks. The valve was from 1977, and did not meet required specifications. Nevertheless, investigators continue looking for other potential causes. Lajous said that there will be a full investigation, and those responsible will be held accountable. (Reforma, 20 November).


ECONOMY 

GDP Up 74% in Third Quarter

According to the Finance Secretariat, the Mexican economy grew 7.4% during the third quarter of 1996, compared with the same period last year (when GDP fell over 8%). Analysts said that this figure surpassed their expectations and will allow for economic growth of greater than 4% in 1997. This is the highest quarterly GDP growth rate registered in the past .15 years. Total GDP growth for the first nine months of 1996 has thus reached 4.4%. However, even so, production levels are still below those of 1994, prior to the eruption of the crisis. (Reforma, 22 November).

Open Unemployment Down

In October, official figures for open unemployment fell to 5.2% of the economically active population, from 5.5% in September. This is the lowest level in the past 21 months. The highest rates of open unemployment are found in Monclova, Mexico City, Saltillo and Monterrey, with levels between 6.1% (Monterrey) and 7.4% (Monclova). In contrast, Tijuana and Leon have the lowest levels; 1.3% and 1.8%, respectively. (Reforma, 20 November).

Banxico Will Continue Intervening in Market

The Deputy Governor of the Bank of Mexico Mexico's Central flank), Guillermo Guemez, said that the Bank will continue to intervene directly in capital markets to defend the value of the peso. When the dollar-peso exchange rate reaches levels that are not congruent with the economic situation in the rest of the country, the bank will intervene. He said, He assured the crowd at the National Textile Industry Convention that the Central Bank will continue its struggle against inflation, but Guemez; guaranteed that the banking system's demand for money would be met. (El Financiero, 23 November).


Zedillo at APEC Meeting

President Zedillo is in the Philippines to participate in the meeting of the group of Asia Pacific Economic Cooperation (APEC). In a document to be presented by the Mexican delegation later this week, the government calls on APEC to reduce tariff and non-tariff barriers, open up to foreign investment, and speed up economic liberalization. In a press conference, Mexican Trade Secretary Herminio Blanco harshly criticized China, South Korea, Taiwan and Japan for their high levels of protectionism. Prior to traveling to Manila for the APEC conference, Zedillo was in China, where he and President Jiang Zemin agreed to fight against the US Helms-Burton law, and supported the re-election of UN Secretary General Boutros Ghali. (La Jornada, 23 November; El Financiero, 25 November).

Huge Price Increases in 1997

The Finance Secretariat for the Federal District announced its intention to increase the price of water and property taxes up to 200% in 1997. City legislators said that such enormous increases were unjustified. The property tax would affect mostly middle class families, although some poorer neighborhoods would also be affected. The water increase is expected to be about 30% for 500,000 poor families, while it would be significantly higher for families with greater resources and higher consumption levels. (La Jornada, 23 November).

Supreme Court to Resolve Bank Crisis

Supreme Court sources predicted last week that the high court wilt resolve the issue of 15 commercial banks legal "inexistance" (see Update #99) "without too many complications." According to these sources, since the banks were legally constituted as National (public) Credit Societies before the privatizations, even if their conversion to "anonymous societies" was illegal, then they stilt exist as National Credit Societies. Debtor groups have insisted that these 15 banks are not legally constituted as anonymous societies, and therefore can not operate In any case, numerous lawyers agree that former President Carlos Salinas de Gortari and his Finance Minister Pedro Aspe broke the law in unilaterally extending the time period for the privatizations. There is reportedly a possibility that the two will be called to testify on the matter. (51 Financiero, 22 November).


CHIAPAS 

Marcos appeals to Congress to Pass Constitutional Reforms

Zapatista Army for National Liberation (EZLN) Sub-commander Marcos called on the Congress to take advantage of its "historical opportunity" to approve a series of constitutional reforms on indigenous rights and culture based on the San Andres peace accords. Marcos insisted that the EZLN "is not going to continue the negotiation process if it only results in agreements that aren't fulfilled." The EZLN began another round of talks with the Congressional Commission for Agreement and Peace (COCOPA) to define precisely what these constitutional reforms, laws and new institutions should like. Some sort of agreement is hoped for by the end of the week. (La Jornada. 25 November).

Evangelical and Catholics Clash

Indigenous Evangelicals and traditional Catholics clashed in the municipality of Venustiano Carranza over land and religious disputes. At least one person was killed and 17 others wounded in the incident. Reportedly, the neighborhood of Monte de los Olivos was founded in August by a group of 22 Evangelical families that had been expelled from Aguacatenango on two previous occasions for their religious beliefs and practices. According to the Evangelicals, the traditional Catholics from the neighborhood came to their land armed with machetes, knives, stones and sticks to "provoke them" and that they defended themselves Most of the wounded are in the hospital in serious condition.) La Jornada, 25 November).


Corn Producers Negotiate End to Road Blocks

Corn producers who for two weeks had blocked roads in seven municipalities in Chiapas, ended their protest today in a exchange for government commitments to negotiate with them. The approximately 100,000 producers were demanding an increase in the price of their product. In the agreement signed with state and federal agriculture officials, the government said it would discuss the price increase, as well as support programs for the peasants. In addition, the state government agreed to form a commission to investigate the murder of three of the protesters by police on November 9, and it agreed to "consider" canceling arrest warrants against the protesters. (La Jornada, 22 November).

Indigenous Convention Completes First Assembly

During the first assembly of the National Indigenous Convention, 137 delegates agreed to attend the next round of peace negotiations in Chiapas and to organize protests between now and December 15th. The demonstrators will demand that the constitutional reforms regarding indigenous rights agreed to in the San Andres accords be carried out. In addition, they will protest the systematic violation of indigenous rights and freedom. and the militarization of Indigenous communities.


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.