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From: otero@sfu.ca (Gerardo Otero)
Sun, 12 Feb 1995 14:00:00 -0500
To: chriscd@jhunix.hcf.jhu.edu
Subject: Roett & Chase Bank v. Zapatistas
>**********************
>
>---------- Forwarded message ----------
>Date: Fri, 10 Feb 1995 17:55:09 -0600 (CST)
>From: Harry M. Cleaver <hmcleave@mundo.eco.utexas.edu>
>To: chiapas-l@profmexis.dgsca.unam.mx
>Cc: mexico94@profmexis.dgsca.unam.mx, mexico-l@udlapvms.pue.udlap.mx
>Subject: Chase Bank calls for Crushing Zapatistas
>
>"In the name of investor confidence, a powerful U.S. bank is calling on
>the Mexican government to crush the Zapatista insurgency in Chiapas."
>Thus begins a striking article in Ken Silverstein and Alex Cockburn's
>February 1, 1995 issue of COUNTERPUNCH.
>
>Silverstein and Cockburn's article is based on an internal report
>prepared by Riordan Roett, director of Latin American Studies at the
>Johns Hopkins School of Advanced International Studies and now "on a
>leave of absence while serving as a Chase advisor."
>
>Studying the report and exploring Roett's other interventions
>into the Mexico crisis, Silverstein and Cockburn discover a rabid desire
>for war to protect Chase's investors. In the report Roett argues: "The
>government will need to eliminate the Zapatistas to demonstrate their
>effective control of the national territory and security policy". At a
>January 11 seminar for hundreds of investors organized by the Center for
>Strategic and International Studies, Roett "conceeded that his call for
>war, if heeded by Zedillo, might provoke negative repercussions
>internationally, but here were 'always political costs in bold actions.'"
>
>Coming on top of other, more fragmentary but frequent, evidence of the role
>of Wall Street in precipitating Zedillo's declaration of war, these
>materials indicate even more strongly than ever that however much Zedillo
>may wish to crush the Zapatistas for his own internal reasons, the
>external pressures of international capital had become acute.
>Unfortunately, the authors conclusion that "For now, Zedillo and a PRI
>majority will likely reject Roett's final solution for Chiapas." has
>proved to be all too optimistic.
>
>==================================article================================
>
>Ken Silverstein and Alexander Cockburn, "Major U.S. Bank Urges Zapatista
>Wipe-Out: 'A litmus test for Mexico's stability'" COUNTERPUNCH, Vol. 2,
>No. 3, February 1, 1995.
>
>In the name of investor confidence, a powerful U.S. bank is calling on
>the Mexican government to crush the Zapatista insurgency in Chiapas.
>Heading up the larger Wall Street war party is Chase Bank, specifically
>its Emerging Markets Group, which has billions at risk in Mexico. Chase's
>Jan. 13 "Political Update on Mexico," passed to COUNTERPUNCH by a banking
>insider, states bluntly: "The government will have to eliminate the
>Zapatistas to demonstrate their effective control of the national
>territory and security policy."
>
>Chase is under no illusions that the December crash of the peso was
>prompted by the Zapatistas. It is fully aware that the implosion of the
>Mexican economy was caused by the overvaluation of the peso that enabled
>U.S. investors such as itself to convert their killings on Mexican bonds
>into the safety of the dollar.
>
>U.S. financiers and political stragtegists now fear that a Mexican
>government led by the novice Ernesto Zedillo --rather than by
>Washington's trusted agent, ex. President Carlos Salinas-- will waver,
>temporize with the Zapatistas and seek to placate domestic discontent.
>
>But any appeasement of popular fury will come at the expense of foreign
>investors, whose security in Mexico was the fundamental purpose of the
>NAFTA agreement. Hence the need to finish off Subcommandante Marcos and
>his comrades. As the Chase Update put it, "While Chiapas, in our
>opinion, does not pose a fundamental threat to Mexican political
>stability, it is perceived to be so by many in the investment community."
>
>Chase plays down the possibility of a negotiated settlement to the
>conflict in Chiapas, saying 'it is difficult to imagine that the current
>environment will yield a peaceful solution." Zedillo may not be able to
>gain the confidence of the Zapatistas and their supporters because "the
>monetary crisis limits the resources available to the government for
>social and economic reforms." In other words, foreign investors should
>have first rights to the dwindling reserves at the Mexican treasury,
>which will leave almost nothing left to implement anti-poverty programs
>Zedillo has promised for Chiapas.
>
>The author of the Emerging Market Group's memo is Riordan Roett, director
>of Latin American Studies at the Johbns Hopkins School of Advanced
>International Studies and now on a leave-of-absence while serving as a
>Chase advisor. Known as a conservative but rational sort in academic
>circles, Roett's views have hardened since he went to work full-time for
>Wall Street, in the grand homicidal tradition of such academic
>policymakers as Louis Adolphe Thiers, Walt Rostow, Henry Kissinger and
>Hemran Cohen.
>
>Roett is said to be particularly bitter over events south of the border
>because, an informant tells us, he had assured Chase executives that
>Zedillo --whom Roett has known and worked with for a decade-- could be
>counted on to do the bidding of foreign investors. Comforted, Chase
>increased its Mexican investments, only to take a beating when a huge
>trade deficit forced Zedillo to devalue the peso.
>
>Roett also calls on the Mexican government to take a hard-nosed approach
>to other difficulties it is facing. The PRI, Mexico's ruling party, has
>grim prospects for elections scheduled in five states this year. Roett
>proposes that the PRI solve this problem by stealing the vote. "The
>Zedillo administration willneed to consider carefully whether or not to
>allow opposition victories if fairly won at the ballot box," he writes.
>"To deny legitimate electoral victories by the opposition will be a
>serious setback in the President's electoral strategy. But failure to
>retain PRI control runs the risk of spliting the government party."
>
>Roett has been lobbying fiercely in Washington to promote his scorched
>earth policy for Mexico and to demand that Congress quickly approve
>Clinton's $40 billion bail-out of Chase and other big investors --a
>lproblem solved when the president, faced with sure defeat in Congress,
>used emergency powers to authorize a new rescue package. Roett has
>briefed Bob Dole, testified before the Senate Steering Committee, which
>musters conservatives such as Trent Lott and Malcolm Wallop; advised
>State Department officials; and addressed hundreds of political and
>financial leaders at a Jan. 11 seminar organized by the Center for
>Strategic and International Studies.
>
>Roett bordered on hyusteria at the latter affair. Saying that clients
>were always asking him why the Mexican government couldn't control the
>Zapatistas, Roett argued that it was "essential, from the investor
>point-of-view, to resolve the Chiapas issue as quickly as possible." He
>conceded that his call for war, if heeded by Zedillo, might provoke
>negative repercussions internationally, but there wre "always political
>costs in bold action."
>
>Roett's remarks were warmly received by his audience. Elliott Abrams
>furiously scribbled notes during his presentation while nodding his head
>in approval. Syndicated columnist Georgie Anne Geyer wrote an article a
>few days later saying that no one at the seminar "explained [Mexico's
>situation] better" than Roett, adding that scholars and financiers in
>attendance "seemed to agree that while . . . [the Zapatistas] do not
>threaten a wider rebellion in Mexico, they have become a litmus test for
>Mexico's stability."
>
>Dalal Baer, a Senior Fellow at the CSIS and moderator of the seminar,
>thanked Roett for his comments and lamented the dilemma faced by Mexico,
>pressured to open up its political system even though "financial markets
>might not respond positively to increased democracy because it leads to
>increased uncertainty." Like Roett and many other "academics", Baer is a
>creature of Wall Street, serving as an advisor to Bear Sterns & Company.
>
>David Malpass, a director at Bear Stearns, said that inexchange for a
>U.S. organized bailout, Zedillo should appease foreign investors with a
>"giant reestablishment of confidence." Malpass and others suggested new
>privatizations, allowing 100% foreign ownership of the banking system,
>and opening up Mexico's oil industry. Though not discussed at the
>seminar, some House Republicans, acting at the behest of Jorge Mas
>Canosa, head of Miami's Cuban American National Foundation, are also
>demanding that Mexico cut off commercial credits to Cuba.
>
>For now, Zedillo and a PRI majority will likely reject Roett's final
>solution for Chiapas. An official from the Interior Ministry at the
>seminar said the Chase man's call for war was "inadmissible".
>
>But prominent forces in Mexico will be heartened by Roett's analysis.
>Last Dec. 18 a group of Mexican businessmen reportedly met with Zedillo
>to demand tha tthe new government go on the offensive in Chiapas. Some
>high-ranking military officials have long been lobbying for war and,
>according to reprots from Santiago and Buenos Aires, military advisors
>from Chile and Argentina --two of the most brutal of Latin America's
>armies, responsible for tens of thousands of deaths during the seventies
>'dirty wars' --have been sent to train Mexican troops.
>
>The parallel here is with the dispatch of Argentine officers to train the
>Nicaraguan Contras at the start of the Eighties.
>
> * * *
>
>======================================
>Harry Cleaver
>Department of Economics
>University of Texas at Austin
>Austin, Texas 78712-1173
>USA
>
>Phone Numbers: (hm) (512) 442-5036
> (off) (512) 471-3211
>Fax: (512) 471-3510
>E-mail: hmcleave@mundo.eco.utexas.edu
>======================================
>
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