Tropic of Chaos

by Christian Parenti

  Amidst the rising tension, Luis Echeverría began his six-year term as president in 1970. Personally implicated in the slaughter of protesting students at Tlatelolco in 1968, President Echeverría attempted to shore up the state’s legitimacy with a neopopulist program of political and social reforms. “Shared development” was the catch phrase; a massive expansion in public spending, the means. Among other things, the number of university students increased by 290 percent between 1970 and 1976.

  The stimulus was paid for with oil income, which was rising as international petroleum prices spiraled upward. But Echeverría needed more revenue. He needed to collect more taxes from the rich but could not because too many were hiding their wealth abroad. So, the government increased borrowing on foreign markets.53 Under Echeverría, foreign debt shot from $3.2 billion to $16 billion. With the stimulus came inflation. In August 1976, Echeverría’s debt bubble burst, and the peso was devalued 45 percent. Mexico had been a low-inflation country, but in the early 1970s, prices began to rise from an annual average increase of 3.6 percent between 1965 and 1970, to 30.5 percent between 1977 and 1982. By the mid-1980s inflation averaged 90 percent.

  The next president, José Lopez Portillo, continued the balancing act: he repressed the radical Left but allowed the Communist Party to run in elections. He spent lavishly on development projects and invested in neglected sectors like agriculture, housing, health, and education. Again, oil prices were surging. Between 1979 and 1980, Mexican oil income grew by almost two-thirds.54 Yet, the government still had to borrow to pay its bills. The economy was growing by 8 percent per year, many companies were operating at full capacity, and Mexico’s small stock market was booming. From the early 1960s through the 1970s the number of primary schools doubled, and the illiteracy rate fell to 15 percent; the infant mortality rate fell by half, thanks to a nearly tenfold increase in the number of public doctors.55

  Logic of Loans

  In theory, the strategy of taking loans against future oil incomes was sound. As international oil prices increased, so too did the value of Mexico’s untapped petroleum. Mexican planners sought to avoid the “resource curse” of developing into an unbalanced, petroleum-fixated economy. Mexico’s leading politicians wagered that while credit was cheap and oil income high, they could renovate the nonoil sectors of the economy with petroleum-collateralized debt. Because of the oil boom, credit was cheap: financial markets were awash in liquidity because most petrostates lacked the capacity to invest their windfall earnings internally. These so-called petrodollars were recycled through international financial markets. Diversified and balanced economic growth would allow Mexico to generate tax revenue with which to repay the loans. With this strategy, Mexican technocrats sought to avoid the “mistakes of Venezuela,” which had spent most of the century exporting oil and squandering the income. The trick was to invest the petroleum-collateralized income in production, not just spend the money on imports.56

  Alas, imports did not decline, and domestic production did not surge. The peso’s value rose, making imports cheap: grain imports doubled between 1979 and 1980; the oil and service sectors drew away talent. Agriculture, the heart of Mexican society, stagnated amidst the boom, as did other nonoil sectors. Poverty remained severe and widespread. By the end of 1980, Mexico owed $33 billion to foreign banks. As crisis loomed, President José Lopez Portillo insisted, “Our economy is not petrolized.” In fact, it was: nearly 75 percent of Mexico’s export earnings came from petroleum.57

  The Mexican economy was now like a waiter rushing forward with a tray full of dishes: keep moving and you are okay. But, as the bankers say, “It’s not speed that kills; it’s the sudden stop.”

  Crash

  The sudden stop took the form of that disciplinary recession unleashed in 1979 when the US Federal Reserve, under Paul Volcker, jacked up rates. This triggered (but did not cause) the Latin American debt crisis. As the crisis worsened, the International Monetary Fund (IMF) and World Bank stepped in. As chapter 13 on Brazil explains, assistance from the Bretton Woods institutions came with strings attached: emergency loans were given only if austerity was imposed and exports increased. But increased exports meant an oversupply of primary commodities and therefore declining prices. Thus, the debt crisis begat the commodity crisis, a prolonged period of low prices for primary commodities such as timber; metal ores like iron, bauxite, and tin; grains and foods like sugar, coca, coffee; and, to some extent, oil. By one estimate, commodity prices declined 35 percent during the 1980s.58 As a result, many economies in the Global South—the ones now feeling the first effects of climate change—suffered relative stagnation for nearly two decades. Only the overflow of the long Chinese boom and the early impact of climate change finally broke the torpor beginning around 2004 and accelerated to the food crises of 2008 and 2010.59

  The commodity crisis essentially had three causes: (1) the economic slowdown in the developed countries; (2) the rise of synthetic subsidies in part as a result of the oil-price hikes of the 1970s, which raised incentives for new industrial engineering techniques; and (3) the structural-adjustment policies of the IMF and World Bank that forced debtor nations to increase exports and devalue their currencies.60

  In the summer of 1981, as the effect of Volcker’s monetarist squeeze went international, oil prices began to slide, and Mexico faced badly diminished revenues and the world’s largest foreign debt: $70 billion. Mexican economists had projected the country would have oil revenues of $20 billion in 1981 and $27 billion in 1982. Both borrowing and domestic spending were based on those figures. In 1981, however, oil brought in a mere $14 billion, and the next year was also below target.61 The cost of debt servicing now consumed most of Mexico’s projected petroleum sales, thus most of its foreign earnings.62 By the summer of 1982, Mexico owed almost $81 billion to foreign banks, and that sum was growing. To avoid default, the peso was devalued, and the government imposed limited capital controls. It was the second devaluation of the year.63 Rich individuals and private firms began to panic and shift their wealth out of the country.

  On August 12, 1982, Mexico announced that it could not pay its bills and took the first steps toward default, declaring a ninety-day moratorium on repayment. The peso was devalued 30 percent and before year’s end would drop another 53 percent.64 As the New York Times explained, “A default by Mexico could have serious effects on the American banking system and on banks throughout the world. According to one American banker, some United States banks have as much as 90 percent of their capital on loan to Mexico. Even at banks with relatively small exposure, the Mexican loans represent 30 percent of their capital.”65 In early September, President José Lopez Portillo nationalized the country’s private banking system, freezing negotiations with the IMF.66

  Bailout ’82

  The eventual compromise involved the US Federal Reserve, the IMF, and most of the 800 banks to which Mexico owed money.67 In exchange for $12 billion in credit, Mexico began economic liberalization and imposed austerity. Out went Keynes; in came Hayek. The government sold 106 state-owned companies and agencies. These included sugar mills, shipyards, textile and power plants, as well as the parastatal processing plants and the export-marketing firm Ocean Garden Products, to which the unemployed fisherman José Ramírez would have sold his catch.68

  Privatization brought new owners who broke unions, fired workers, and drove down wages. By decade’s end, 1,155 state businesses had shrunk to only 400. The government earned less than $2 billion from these privatizations, which went to service debts.69 At the same time, food subsidies were slashed; those for eggs, milk, cooking oil, sugar, beans, and rice were eliminated completely. The retail price of gasoline and natural gas doubled. 70 By 1986, the purchasing power of the average Mexican was about half of what it had been in 1982. 71

  President José Lopez Portillo, however, retired to a $30 million mountaintop mansion, a monument to venality and arrogance that included a walk-in “refrigerator for furs,” a library with space for
a million volumes, and “an astronomical observatory that is better equipped than National University’s.”72

  NAFTA

  Mexico’s trial by debt began the long march to the North American Free Trade Agreement. The agreement culminated a process of liberalization born of the 1982 debt crisis. Along the way, Article 27 of the 1917 constitution was eviscerated; among other things, it now allows greater foreign investment. On January 1, 1994, NAFTA took effect.73 At the same time, in the southern Mexican state of Chiapas, the Zapatista National Liberation Army, a group of mostly indigenous peasants, rose up against the government, calling NAFTA a death sentence for Indians. 74

  According to its main booster, former Mexican president Carlos Salinas, NAFTA would empower Mexico “to export goods, not people.”75 The rural economy would be modernized, and farmers who could not adapt would find work in the expanding industrial and service sectors. 76 But what did free trade really do for Mexico? An almost quizzical article published in the New York Times in 2009 answered this as follows: “In some cases, NAFTA produced results that were exactly the opposite of what was promised. For instance, domestic industries were dismantled as multinationals imported parts from their own suppliers. Local farmers were priced out of the market by food imported tariff-free. Many Mexican farmers simply abandoned their land and headed north.”77 The piece went on to note that, although the value of Mexico’s exports had quintupled in fifteen years, almost half a million people each year were outmigrating in search of work, a disproportionate number of them from the countryside. With only one-quarter of Mexico’s total population, the countryside accounts for 44 percent of all Mexican immigrants moving to the United States.78

  Under NAFTA, the government dismantled most of the agencies that offered assistance and administered subsidies to small farmers. “Lending by both government and private-sector rural credit programs declined 75% after 1994, when NAFTA took effect, while rural bankruptcies increased six-fold.”79 The reformed Article 27 now allows sale of ejido lands, which has increased landlessness.80 According to a 2010 report by Oxfam, Mexico has spent $80 billion on food imports and now has a deficit in food trade of $435 million.81 Mexican agricultural production has turned away from food for people and internal markets toward animal feed for export.82 Markets for corn, the staple food, protected by government policy until NAFTA, have been completely opened.83 Peasant organizations have demanded a renegotiation of the treaty.84

  Since 1994, Mexico’s economic growth has slowed. It now averages only about 3 percent. From 1921 to 1967, annual growth averaged 5.2 percent, and for much of that period, it was over 6 percent.85 According to World Bank figures, “in 2004, 28 percent of rural dwellers were extremely poor and 57 percent moderately poor.”86

  The suffering and social polarization produced by neoliberalism has fostered corruption and exacerbated relative deprivation. This is the stage, preset, onto which now enters the issue of climate change to converge with the economic crisis and the legacy of political repression. In combination, all of these factors help drive migration to the United States and to northern Mexico, where the chaotic drug war now eats away at society.

  Narcoguerra: Countdown to Chaos

  Tanila Garcia’s shack looks out upon the United States of America from the western edge of Juarez. The view takes in a kaleidoscopic political landscape defined by the social chasm between the underdevelopment of the Global South and the dazzling wealth of the Global North. The shack has a dirt floor covered with strips of salvaged grey office carpet. Its walls are lined with layers of flattened cardboard boxes, and the small windows are covered with clear, foggy plastic to keep out the wind of the high desert winter. Each of Garcia’s rooms, one for her and her husband, the other for their four children, two boys and two girls, smells of sweat and dirty clothes. On a step of land above the shack sits a plywood outhouse.

  Her little home in the colonia of Anapra was purchased for the equivalent of $2,000. She has enclosed her barren yard with a homemade fence of sticks, barbed wire, and burnt-clean wire mattress frames. From a low naked tree hang three wooden cages for songbirds she has captured: the two small red birds are called gurrions, and a bigger one is a chivo. The birds hop nervously back and forth in their shoebox-size confinements. “I like how they sing in the morning,” said Garcia.

  She works cleaning houses and her husband works day-labor construction. At that time, they had no employment. One of her girls, age eleven, stood nearby as Garcia explained how they survived: “We save food when we have it.”

  She draws her water from a neighbor’s tap. Electricity is pirated from a nearby utility pole. The aging extension cords that feed her home are draped haphazardly over branches and roofs. During rainstorms, jerry-rigged arrangements like these are known to electrocute people who walk too close to them on muddy ground. The average annual rainfall here is minimal—only about eight inches, but parts of Juarez and El Paso are occasionally hit by flash floods. When in August 2006 the skies dumped more than fifteen inches on the region, the pit latrines overflowed, and the slums of Juarez flooded with electrocuting sewage.

  Across from the little homestead lies a sandy access road and the metal wall of the US border. Beyond that are the arcing tracks of the Southern Pacific Railroad, and rising up the slopes of the Franklin Mountains are the middle-class suburbs of El Paso’s west side, Coronado Hills and Ridge Crest.

  This landscape is so extreme in its social contrasts, so politically didactic, that it could have been invented by revolutionaries, preachers, or lazy journalists had it not already been created by migrants, land speculators, politicians, bureaucrats, and industrial firms in search of cheap labor. This is Juarez: the city NAFTA built and then began to kill. But climate change will finish that task, probably some time around 2050. As climate change pushes people off the land, they come here in search of work and to cross the border. As they wait, the drug economy sucks up their youngsters.

  Juarez and the militarized border against which it leans are not the products of climate change, but climate refugees now pass through here, get stuck here, and die here. And the vortex of murder that now defines Juarez is a harbinger of a world in which climate mitigation has been ignored and adaptation takes the form of violent class apartheid.

  In the Beginning There Was Murder

  The infamous violence of Juarez first attracted attention in 1993, on the eve of the passage of NAFTA. It seemed a serial killer was preying on the young women who toiled in the city’s maquiladora assembly plants. The women usually turned up dead after having been raped and mutilated. The maquila workers were especially vulnerable, it was said, because of their early-morning commutes across desolate stretches of open desert, where they could be kidnapped with ease and anonymity. Juarez has a strangely desolate, patchwork geography that is the result of land speculators leapfrogging one another ever further out into the desert.

  The police captured one alleged culprit after another. First, the perpetrator was a known sex offender: an Egyptian chemist who had moved to Juarez from Midland, Texas. He was jailed, but the killing went on. Then police blamed it on a gang of teenage rapists, then on a bus driver. But the killing went on. A superb documentary, Senorita Extraviada by Lordes Portillo, presented evidence that linked elements inside the police to the rapes and murders.87 In the last few years, the storyline has shifted way beyond that: from dead women to a whole city dying. The violence now appears, at first glance, to be driven by turf battles and leadership struggles between infinite numbers of narcoleros. But it’s worse than that.

  Charles Bowden, the longtime chronicler of Juarez, described the end-times quality of lawlessness that now obtains: “Imagine living a place where you can kill anyone you wish and nothing happens except that they fall dead. You will not be arrested. Your name will not be in the newspapers. You can continue on with your life. And your killing. You can take a woman and rape her for days and nothing will happen. If you choose, if in some way that woman displeases you, well, yo
u can kill her after raping her. Rest assured, nothing will happen to you because of your actions.”88 Later, he explains it more abstractly: “For years, people have sought a single explanation of violence in Juarez. . . . We insist that power must replace power, that structure replaces an earlier structure. . . . Try for a moment to imagine something else, not a new structure but rather a pattern, and this pattern functionally has no top or bottom, no center or edge, no boss or obedient servant. . . . Violence courses through Juarez like a ceaseless wind. . . . Violence is now woven into the very fabric of the community and has no single cause and no single motive and no off button.”89

  This lawlessness is the context in which climate change is beginning to have effects. It is also part of what makes Mexico highly vulnerable to climate change. So then, what is the history of the narcoviolence that now ravages northern Mexico?

  The Pus of Free Trade

  By most accounts, the Mexican cartels either had old roots in bootlegging or got their start as auxiliaries of Colombian organizations.90 During the second half of the 1980s, Mexico became a transshipment point for illicit drug imports to the United States following the US Drug Enforcement Administration (DEA) crackdown on Florida smuggling routes starting in 1982. As Florida closed, Mexico opened.91 In 1988, cocaine seizures along the California border shot up 700 percent in one year as Colombians moved cocaine through traditional heroin and marijuana routes, known as the “Mexican pipeline.” The DEA estimated that 30 to 40 percent of all cocaine entering the United States now arrived via Mexico.92 That percentage would later rise dramatically.