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La Semana: Sunday, Jan 23
The week in politics, economics and culture
This first Sunday edition includes three stories from Mexico’s week in news. I list all sources (with links) at the bottom of the email. Please send me your comments, feedback and questions, and feel free to forward this to anyone who may be interested.
Citigroup to sell Banamex
The first major financial news of 2022 in Mexico came on January 11, with the announcement from US-based banking conglomerate Citigroup that it would be exiting commercial banking in Mexico. Citigroup acquired Banamex in 2001 (for $12.5 billion USD) and will be selling the entire Citibanamex commercial portfolio, which also includes one of the most significant collections of Mexican art, historical archives and buildings in the country. The valuation has been estimated between 8.5 and 15 billion USD. In recent years, Banamex’s market share had dropped as other foreign competitors (BBVA, Santander and HSBC) have expanded in the Mexican retail market. Banamex was originally founded in 1884 and operated as Mexico’s national state-run bank during much of the twentieth century before privatization led to its 2001 sale to Citigroup.
This news has stayed near the top of the screen in Mexico for the past week as pundits discuss what it means for the Mexican economy and government officials have tossed out names of potential buyers: Ricardo Salinas Pliego (owner of Banco Azteca and founder of Grupo Salinas), Carlos Slim (telecommunications magnate and founder of Banco Inbursa), Carlos Hank González (president of Banorte), among others. The director of the UIF (Financial Intelligence Unit), Pablo Gómez, made a salient observation via Twitter: “it would be better for Banamex to be in the hands of someone who does not already have a bank, to avoid the growth of an oligopoly. Or better yet: a mixed bank, made up of private and state partners.”
President López Obrador weighed in with his wish for the bank to be “Mexicanized” and also to point out that Citigroup has been selling its retail banking operations in Asia and other countries in Latin America: “…this shouldn’t be misinterpreted, since adversaries will capitalize on anything to say that things are bad economically in the country, and that is why Citigroup is selling Banamex.”
Jorge Castañeda, political analyst and former Secretary of Foreign Affairs during the Fox administration, posed an intriguing question on the news show “Es la hora de opinar” on Jan 17: why did Citigroup publicly announce the sale of the bank before having a buyer in place? In Brazil and in other countries, these announcements came simultaneously. We can only speculate as to why, but it has certainly given administration officials the chance to not only drop names, but also create a populist narrative around the news. Marcelo Ebrard, current Secretary of Foreign Affairs, tweeted that the culturally significant assets of Citibanamex should, “for their preservation”, become national property. Ebrard suggested this could also be a form of “repayment” for the “enormous and unfair” debt that Mexican citizens are still paying off as a result of the Fobaproa (Bank Savings Protection Fund) debacle.
Fobaproa was created in 1990 as a contingencies fund to help Mexican banks maintain liquidity and was used to bail out a number of banks after the 1994 devaluation crisis, eventually accumulating a debt of 552 billion pesos (equivalent to 11% of the country’s GDP at the time). The discovery of fraud and tax evasion at several of the beneficiary banks became a scandal that led to the arrests of a handful of prominent Mexican bankers. Fobaproa was renamed the Bank Savings Protection Institute (IPAB) in 1999 when its debt was assumed by the Mexican state. As of now, 890 billion pesos is owed—equivalent to three times the public education budget of 2019—and the annual payment (exacted through taxes) in 2020 was 4.3 billion pesos.
The presidential recall referendum (“revocación de mandato”): part I
April 10th is an auspicious day on the Mexican calendar this year: it is Palm Sunday, and the date chosen for the “revocación de mandato”, or presidential recall referendum. The INE (National Electoral Institute) announced on January 19 that they have collected and validated enough citizen signatures (3% of eligible voters) to move ahead.
At first glance, this news might make you suspect a grassroots upswell of discontent with López Obrador’s administration is inspiring citizen support of the petition. But the exact opposite is true. In fact, AMLO first mentioned his commitment to the recall in his speech to the nation on December 1, 2018 when he took office: “I will carry out my promise to subject myself to the recall vote. There will be a referendum to ask the Mexican voters if I should stay in power, or if I should step down…the people gave me [the power], and the people can take it away.”
Mexico has term limits and presidents can only serve one six-year term. But in a constitutional reform in 2019, this new electoral mechanism was approved in what some analysts see as a not-so-opaque attempt to circumvent the limits of the “sexenio”. Will AMLO use a ratification of his popular support via referendums to make further constitutional amendments, to extend his own term? Supporters deny this implication, affirming that the importance of the referendum is to empower the Mexican people to kick out future bad leaders. Detractors point out that this essentially changes a six-year term into two three-year terms with a president who is permanently campaigning.
As AMLO and the Morena (Movement for National Regeneration) party have been ardently promoting the referendum, it is hard not to see it as a ratification more than a repeal of power. 8.9 million of the 11 million petition signatures obtained between November 2021 and this week have been collected by a single NGO called Que Siga la Democracia (May Democracy Continue). The organization’s mission: “we work every day to create the conditions in our country for democracy to continue being a reality.” Their website displays a graphic of López Obrador and the campaign hashtag #QueSigaAMLO (may AMLO continue). According to the law, 40% of eligible voters will have to participate in the referendum for it to be valid, which seems unlikely to occur. While AMLO’s supporters are motivated to go to the voting booth, the opposition appears mostly to favor abstention from a frivolous electoral exercise which they view as a waste of time and resources.
And speaking of resources…The INE and AMLO’s administration have been in a tug of war over funding the referendum, which the agency estimates will cost 3.8 billion pesos. Congress cut the agency’s budget by 2.3 billion pesos last year, which led to the INE threatening to postpone work on the referendum until receiving additional funding. The response from the administration and Morena has been unwavering and even punitive: a criminal investigation was opened by the attorney general’s office (FGR) against six INE ministers, instigated by a complaint from the president of Morena. This led to public criticism and the complaint was withdrawn. Lorenzo Cordova, director of the INE, said in a January interview with El País: “A line has been crossed, criminalizing those who do not think the same way as you…this was a political, not a judicial decision, which had to be retracted because of societal pressure.”
The director of the Department of the Interior (Segob) reiterated at the end of December that there would be no additional monies made available for the referendum and on December 22, the Supreme Court ordered that the INE must continue the process of organizing and administering the referendum, but also that a request can be made for additional funding from the Department of the Treasury (Secretaría de Hacienda).
AMLO has a long history of run-ins with the institutions of Mexico’s democracy, most notably the National Electoral Institute (INE), formerly known as the Federal Electoral Institute (IFE). In the tightly contested 2006 presidential contest, supporters of AMLO and the PRD (Democratic Revolution Party) protested for months after the July election, claiming that their candidate had been the legitimate winner. The ballot results showed a difference of merely 0.06% in favor of the PAN (National Action Party) candidate Felipe Calderón (36.69% of the vote, as opposed to AMLO’s 36.69%). The federal electoral tribunal only authorized a partial recount and declared Calderón the official winner in September 2006. In the next general election of 2012, a similar story played out: the PRI (Institutional Revolutionary Party) candidate Enrique Peña Nieto tallied 39.17% of the vote, and AMLO came in at 32.41%. Once again, AMLO and the PRD cried foul. This time a wider recount was conducted and while admitting to some irregularities, the tribunal still found Peña Nieto to have the majority. In 2018, AMLO and his new coalition party, Morena, won the election in a landslide (with 54.71% of the vote). According to some polling estimates from December 2021, AMLO still has approval ratings around 66%.
Stay tuned for a part II on this topic, one of the most significant on the political agenda for the country in 2022.
Former president Luis Echeverría turns 100 years old
On January 17, one of the most notorious faces of the PRI’s seventy-year reign, Luis Echeverría, celebrated his 100th birthday. Echeverría was president of Mexico from 1970-76, a period darkened by the “guerra sucia” (dirty war) in which opposition was systematically repressed and persecuted by the government. Before his presidency, Echeverría served in the government of Gustavo Díaz Ordaz and was Secretary of the Interior during the student massacre on October 2, 1968 in Tlatelolco.
In 1971, another incident of state violence against student protestors known as “El Halconazo” left at least 30 students dead and an unknown number injured or missing. In more recent investigations of military and government-sanctioned violence during this period, hundreds of executions, tortures and disappearances were uncovered. Echeverría was indicted for genocide and for his involvement in “El Halconazo” in the early 2000s by special prosecutors, but was exonerated in 2009.
Echeverría’s government also censored and intimidated journalists and even put a ban on recording and performing rock music in Spanish, which was associated with leftist youth groups. Recently declassified documents from US national security archives verified Echeverría’s rumored collaboration with the CIA. His Federal Security Agency (DFS) shared information derived from interrogations with the US intelligence agency. And yet, on the international stage, Echeverría took a less pro-USA stance in the alliances of Cold War politics: he was an advocate for the non-aligned movement of countries, the original “third world”.
Echeverría embodied the shape-shifting political chimera that was the PRI: in his economic policies he leaned statist left, in his political and judicial policies he was authoritarian, particularly in crushing leftist youth groups and guerrillas, in international relations he acted as CIA informant and also offered asylum to political refugees from Chile after Allende was ousted. With one hand he stifled student and union protestors while with the other, he redistributed private lands in Sinaloa and Sonora to appease rural unrest.
The Mexican economy grew 6.1% during Echeverría’s presidency, but by the end of his term, escalating inflation and ballooning debt left the country in crisis. He had centralized power and expanded the infrastructure of the Mexican bureaucracy, following his mantra of “the [Mexican] economy is run from Los Pinos (the presidential residence).” Echeverría continued to wield influence long after he left Los Pinos and his fingerprints can be seen to this day. The current attorney general, Alejandro Gertz Manero, worked in the attorney general´s office during the Echeverría term. In what foreshadowed the internecine relationship between government and organized crime, Echeverría’s brother-in-law, Rubén Zuno Arce, was arrested and imprisoned in the United States in 1992 for his involvement in the Guadalajara cartel run by Miguel Ángel Felix Gallardo.
Some analysts hear echoes of Echeverría in the populism of Andrés Manuel López Obrador and his strong personal conviction that only he knows what is best for the country—and disregard (or worse) for the opposition. However, the policies and forms of governance differ markedly between the two, despite some parallels in their ambitious visions. Echeverría was a builder of institutions, a profligate spender, an “economic populist”, as observed by analyst Carlos Bravo Regidor. He also didn’t hesitate to use the brute force of the state to quell dissent: as described by academic Soledad Loaeza, “[Echeverría] had no scruples when it came to fortifying his power.”
In contrast, AMLO’s sexenio has been marked by the dismantling of many Mexican institutions, hollowing out their budgets and laying off personnel in a “political populism” driven by a narrative of austerity. While AMLO has been vocal in his disdain for criticism that comes from the press, the “neoliberal” opposition, or beleaguered Mexican institutions, his government has not begun to violently suppress them. If anything, perhaps the failures of echeverrismo could serve as warning to AMLO and his grand “cuarta transformación”, the “fourth transformation” of Mexican history: the poet and public intellectual Gabriel Zaid said of Echeverría, “…instead of using the power he had to serve the country, he invested it in acquiring more power: he ardently dedicated himself to enlarging the presidential throne, until it was too big for him.”
Conoce Fobaproa, la deuda bancaria que los mexicanos pagarán medio siglo (Business Insider MX)
Revés al INE: Corte ordena no posponer revocación de mandato (Animal Político)
¿Qué es la revocación de mandato y se puede hacer en México? (Expansión Política)
¿Qué esperar de la consulta para la revocación de mandato? (Semanario Gatopardo)