A rudimentary understanding of Mexico’s economic history is necessary to set the context for examining the roots of migration in Oaxaca and the powerful stories of our friends from Santa Maria Tindu. I am no economics major, and don’t specialize in Mexican history, so this is meant only to be a brief summary of the most important and startling information that contributes to Mexico’s current economic condition and its relationship to the United States. My apologies for leaving so much out, my mistakes, and painting too simple of a picture. The vast majority of this story is drawn from the extensive presentations of Witness for Peace and EDUCA, and I am largely trying to relate much of their message without speaking directly for them.

During roughly the first half of the Cold War, the United States practiced a policy of containment liberalism, which meant Mexico was flooded with U.S. dollars in support of national industry, money with few stipulations or oversight to its use as long as the country remained a strong U.S. ally. This contributed to a culture of corruption and continued expectations of free money with few strings attached. When the oil crisis and subsequent recession hit in the 1970’s, western banks swollen with petro dollars from OPEC members had billions in their coffers and a “developed” world still struggling in the recession and borrowing little. Bankers and politicians turned to the developing world, offering billions and billions in petro dollar loans for the first time, with extremely low (though variable) interest rates, and you guessed it, few controls. From 1970-1982, Presidents Verria and Portilla borrowed these billions, amassing a staggering national debt. To pay the interest on these loans, Mexico pumped more and more oil at the expense of other national industries; by the mid-80s oil would account for 75% of their export revenue! Subsequently, the “Green Revolution,” pushed by governments and billed as the solution to world hunger, forced many Mexican farmers away from traditional (and more sustainable) methods of farming to fertilizer and machinery, exposing new vulnerabilities.

Then, the era of Regan and Thatcher began in 1981, and with it their decision to fervently promote pure free-market capitalism and free trade. For the developing word this meant a crucial shift in production for internal to external consumption. Then in 1982, the Volcker shot spiked interest rates in order to revalue the dollar. This, along with a rapid drop in oil prices, irresponsible borrowing, corruption, and a recession in the U.S. and Europe that left Mexico with no market for its goods, create what WFP called “Mexcio’s Perfect Storm:” in August Mexico went into debt crisis and threatened to default on its loans. Who should swoop in but the International Monetary Fund (IMF) with a 7 billion dollar loan in and its now infamous Structural Adjustment Programs (SAPs). It “rescued” Mexico again in 1988 and 1992 (the last rescue package was a $95 billion loan). In the decade-long process the SAPs decimated Mexico’s social security net with austerity programs that cut social services, especially health and education, eliminated price controls for corn and coffee, destabilized wages and devalued the peso, and sold off profitable state-owned industries to foreign investors while international investment put small and medium-sized enterprises out of business. Not surprisingly, these programs resulted in an increase in poverty, social conflict, and migration.

This is the backdrop out of which NAFTA emerged, the subject of Pt.2, which will appear tomorrow. We returned from our visit to Santa Maria Tindu a little after ten tonight, which was an amazing but also painful and sad experience. The people there have giving hearts and beautiful souls. I was also told I could handle spice like a real Mexican today (made my trip)! There will also be much more on our visit tomorrow. Quite frankly, we were going to have posts up tonight but ended up talking till 1:30 about this trip, the project, WDA, activism, and the immigration dilemma, and didn’t get to all of the actual writing.

¡y ahora duermo!

–john

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