INTERVIEWS TRADE, DEBT AND PLUNDER IN MEXICO

INTERVIEWS TRADE, DEBT AND PLUNDER IN MEXICO
An Interview with Cuauhtemoc Cardenas Cuahtemoc Cardenas is the leader of Mexico's Partido de la Revolucion Democratica (PRD). He is widely believed to have won Mexico's 1988 presidential election but to have been denied victory by fraud committed by Mexico's ruling party. Multinational Monitor: What would the ramifications of a United States-Mexico-Canada free trade agreement be for Mexico? Cuauhtemoc Cardenas: A free trade agreement would consolidate a situation and a relationship of dependence which has no advantages for Mexico. A free trade agreement will close the possibility of our making autonomous decisions. It will violate our sovereignty. Mexico is already one of the most open economies in the world. I do not think that Mexico will liberalize more than it already has after a free trade agreement is signed. I think Mexico has opened its trade as much as it can. Maybe something can be obtained from the United States, but we must also take into account that our economy has been in stagnation for eight years. So there is not much Mexico can offer at this moment. Mexico has nothing to gain because we have nothing to export-- nothing more than those items the transnationals are already producing in and exporting from Mexico. So Mexico will continue as it is: as a supplier of cheap labor, as a supplier of raw materials and a manufacturer of some low value-added products. Labor will become cheaper and cheaper; wages have been declining continuously since 1982. If present policies continue, our standard of living will continue to decline and unemployment will continue to increase. Many of the companies that are working to satisfy internal demand will continue to close or go broke. Around 75,000 enterprises have stopped working in the last eight years because of the opening of our borders and the neo-liberal policies that the government has applied. MM: Why is the Mexican government advocating a free trade agreement? Cardenas: The Mexican government wants to sign a trade agreement as soon as possible because it thinks that a trade agreement will make foreign investment come to Mexico. This government is desperately looking for investment and is implementing several measures in an attempt to attract this investment. Privatization of state companies, privatization of the banks very recently and the announcement of this new trade agreement with the United States are all measures to attract foreign investment which has not flowed to Mexico. MM: If you become president, would you consider revoking an agreement signed by the Salinas government? Cardenas: We have been committed to revising every political, legislative or administrative measure of this government. That would be one of them. In our bilateral relationship with the United States or in our international relations, especially regarding economic cooperation, we will have to consider our priorities. We need to improve social conditions, we have to create employment, we have to raise wages and the income of the people. We have to give assurances so that our economy--not only those activities or those branches that are export-oriented but also those that serve our internal markets--can grow rationally. So everything would have to be revised. MM: Would you consider putting limits on foreign investment, or going back to old Mexican standards which are not being enforced? Cardenas: Foreign investment should comply to our laws. We have the foreign investment law [which requires a minimum 51 percent Mexican ownership of all enterprises] and the regulations for the law, how the law must be applied. We call that secondary law. There is a contradiction between the main law and the secondary law. So we will have to rationalize, take away those contradictions which allow foreign investment in violation of certain articles of the law. If we have a certain law, and we enforce that law, foreign investment can go to Mexico. I don't think the law has been the obstacle for foreign investment going to Mexico. MM: What has been the obstacle? Cardenas: There is no confidence in the present Mexican government, a government that is in power, but not because of the votes it got. There is no confidence in an economy which is in crisis. MM: What should the role of foreign investment in the Mexican economy be? Cardenas: I think foreign investment is complementary. The current government is trying to make foreign investment the main source for our development. Our historical experience shows that we must have state investment in certain areas. State investment has always been followed by private national and private foreign investment and, finally, small and medium investors. I think that experience must be taken into account, and that is what will happen. In general, I don't think we will have investment if it is not stimulated by the state. MM: What are the ramifications of Mexico's dependence on the maquiladoras [foreign-owned factories which assemble, and sometimes manufacture, goods for export, mostly to the United States]? Cardenas: Maquiladoras have helped to promote employment, especially in the border areas. But the factories do not comply with our laws, and the social conditions of the workers there are not satisfactory. The workers are not allowed to unionize. They are not paid as [much as] they should be, considering the kind of work they are doing. All this must be revised and put into accordance with our laws. It is not enough for them to incorporate our cheap labor into their economic processes. In the second stage of maquiladoras, they should try to integrate into our economy. An agreement should be reached between the maquiladora owners, the workers and the state so the products the maquiladoras are now importing are produced in Mexico. MM: Do you think that if you put these changes in place, the maquiladora owners who come primarily for cheap labor would leave? Cardenas: Maybe some of them will leave. But we will not try to chase them away. Others may really try to integrate their productive cycles in Mexico. Our main concern will be raising the working conditions and the income of the workers. MM: How do you evaluate the Mexican government's response to the debt crisis? Cardenas: All the Mexican economic policies have been built around the payment of the debt. Paying the debt is the main priority of the Mexican government. That has left no possibilities for investing in social improvement or reactivating our economy. Economic policy should be devised around other priorities: improving social conditions and trying to make our economy grow in a sustained way. That would require us to negotiate other terms for the debt. In negotiations around the Brady Plan, co-responsibilities have been disregarded. That is, there is a co-responsibility of those who lent the money and those who received the money, especially after both knew that Mexico was incapable of continued payment. When a certain level of indebtedness was reached, both sides knew Mexico did not have the capacity to continue paying. And that part of the debt should receive different treatment than the part that was used for productive projects. One had, maybe, economic purposes; the other had, clearly, political purposes. MM: What point do you mark as the beginning of the second kind of debt? Cardenas: I do not know where because the Mexican government has never given clear and detailed information about the debt. We do not know under what conditions it was contracted, we do not know how it is being paid, we do not know the commissions that have been paid to different Mexican government officials for contracting the debt and we do not know the composition of the debt. There are many, many creditors; we are talking about more than 500 banks or something like that. So it is very difficult to know the condition of each credit. And the Mexican government has never given a detailed account MM: If you were in power, would you renounce certain parts of the debt? Cardenas: In the last negotiation of the debt, in early 1990, [the amount of the debt forgiven] was clearly insufficient. It does not liberate resources for development. It makes debt service payments easier, but it is not sufficient to have resources to improve social conditions and to improve our economy. So we are able to continue paying, but that is all. The last debt arrangements have not [spurred] development in Mexico. MM: Would you a consider a full renunciation of the debt, either alone or in conjunction with other Latin American debtors? Cardenas: The Mexican government has always been against negotiating [in conjunction] with other debtors. [But] we think that we should try to negotiate [along] with other Latin American countries which have similar problems. We think that it is possible to obtain other terms to continue payment. We have never considered the possibility of suspending payments or going to a moratorium as a unilateral decision. We must negotiate and we must maintain the relationship with the world financial community. We should make decisions after talking, not before. We must talk, we must try to open new negotiations. After we see what happens, we will make other decisions. MM: What will be the effects of the privatization of state-owned enterprises in Mexico? Cardenas: I think it will affect Mexico in a very irrational way. It is being done as a matter of ideology: "everything must be privatized because it is good to privatize." Privatizing or state intervention are not matters of ideology; they are just mechanisms or measures to arrive at certain objectives. Through this privatization, many productive cycles have been broken. That is very clear in the petrochemical industry, for example. There is much corruption involved in the sales of these enterprises. The rumor is that many people from the government are buying the state-owned companies with people from the financial groups. The public does not know when bids are being taken, who is buying enterprises or at what prices and under what conditions the enterprises are being sold. When something is known of the sale of state-owned companies, it is always [the case] that there was a better bid which was not considered. MM: How do you respond to the argument that state-owned enterprises should be sold because they are corrupt? Cardenas: I think the first step should be to fight corruption. If there is corruption, first you put the corrupt official in jail. And then you can do something else with the company. MM: Would you continue to privatize state-owned enterprises if you were in power, but in a more rational way? Cardenas: Some of them, yes. Some of the others, no. You must take into account that many of these enterprises went to the government after they went broke in private hands. They had credit from state banks, they could not pay their debts and they paid with installations and equipment. We will have to establish which sectors of the economy, like oil and electricity, are strategic and should be reserved only for state intervention. We must also establish priority activities, where the government should have some, but not majority, participation. In communications and in the food industry, it is very clear that the state must have a certain control. You cannot just say the government is not going to intervene in any part of the economy or that it is going to intervene in everything.

BRAZIL: A TIME FOR REVOLUTION
An Interview with Luiz Ignacio "Lula" da Silva Luiz Ignacio "Lula" da Silva was the presidential candidate of the Partido dos Trabalhadores (PT, the Workers' Party) in Brazil's December 1989 elections. The former auto worker and labor leader fell just short in his presidential bid. Multinational Monitor: What is your opinion of the United States-Latin American free trade agreement which George Bush has proposed? Luiz Ignacio "Lula" da Silva: Free trade between Holland and Germany or France and Italy has meaning because the productive structure and costs are similar, so prices can be more or less the same. But free trade between Brazil and the United States or Bolivia and the United States would be very unequal. We would export capital and import manufactured commodities. Although we may consider ourselves freedom lovers, although we dream of a society without borders, in this case it is necessary that there be borders. MM: What do you think about Brazil's recent moves away from its traditional protectionist policies? Lula: If Brazil had invested in computer and software development, it could begin to change its protectionist policy. However, the country didn't invest in these technologies. It is important that the country maintain a protectionist policy for a determined period so that it will be at the same level as the competitors. Our country must be able to offer modern goods at prices competitive with the world market. [But], although we consider ourselves nationalists, we don't want to maintain protectionism permanently and [support] bad investors and bad enterprises. Brazil is a country that has a good intellectual base and a good industrial base. But we are behind where we were ten years ago. Brazil had a bigger industrial capacity ten years ago than it does today. If, in the last 10 years, we hadn't sent $90 billion to our creditors and this money had been invested in research and internal development, we could already be competitive with the most modern countries in the world. MM: How has the last decade affected workers and the poor? Lula: Ten years ago, the amount of money paid in wages represented 50 percent of national income. Today it is only 35 percent. The buying capacity of the minimum wage today is 25 percent of what it was in the 1940s. It is not possible to improve Brazil if there is no redistribution of income. The poor person in Brazil lives worse than the American poor person, but the Brazilian rich live as well as the American rich. MM: How would you redistribute income? Lula: It cannot be done automatically or by enacting a law. The first measure would be to invest public sector resources to generate new jobs, mainly in social areas like education and health programs. Second, [we must] undertake agricultural reform. Third, the purchasing power of workers must be recuperated. MM: Would you mandate that workers receive a certain share of a companies' earnings? Lula: It is not for the government to say that. The government has to provide the necessary information so that the union movement in its direct relationship with the bosses may [improve] its wage leverage. MM: Do you have any plans to nationalize industries or enterprises? Lula: No. Now the plan is to win the power. If, after taking power, we find political reasons to nationalize, we will. But it will not be by our initiative; a decision to nationalize will depend on how the capitalists behave. MM: Do you have plans for land reform? Lula: Agrarian reform is an essential condition for Brazilian development. Brazil could easily feed itself and use agriculture as a solution to the homeless situation and unemployment and to improve living conditions. In order for all of this to happen, it is necessary that we have an agrarian reform. There are millions and millions of acres of land which are now unproductive and could be made productive with an agrarian reform. MM: What do you think of the Brazilian government's policy to protect the rainforests? Lula: The government has made a lot of noise about the rainforest, but it is much more worried about its image than [about] solving the Amazonian problem. We have been defending an environmental policy that takes into account first the fact that there are people living and working in the rainforest--the indigenous people, the rubber tappers. We have to take into consideration that there are already millions of people in the Amazon and we can't take them out of the forest. But we can do research into sustainable forms of living for the people who are in the forest. And we can help the people--such as the gold diggers, who destroy the rivers, the forests and the land--exploit the Amazon's minerals more rationally. And with agrarian reform, we will stop the flow of millions of people into the Amazon by giving them jobs. The government is not [now] doing any of this. MM: How likely is it that the reforms you have outlined will someday be enacted? Lula: I see all over the world possibilities of great changes. As it was impossible for Eastern Europe to keep being how it used to be for so many decades, in the same way it is not possible that the Third World will continue in its same situation of poverty. MM: Could a strong reformer be elected in Brazil? Lula: In Brazil, the word reformist has a bad connotation. The people we have elected are already reformists. Now it is time for revolutionaries. MM: But can someone with revolutionary ideas get elected and hold office? Lula: I see no chance that the military might overthrow a president affiliated with the PT [the Workers' Party]. The great reforms are necessary and inevitable; it is just a question of time. I think they will be supported by the society. MM: Do you think you will win the next presidential election? Lula: We have several years yet before the next election, and some other [candidate from PT] may run. But I think PT will be the government.