Wikileaks: Poverty and wealth in Mexico
[Translations of two articles from La Jornada of Mexico City for February 14, both by Roberto González Amador, on newly released Wikileaks cables. See original articles here and here and Wikileaks cables here and here. More complete list of recently released cables on Mexico here.]
Felipe Calderón, Beatriz Paredes, Jesús Ortega -- La Jornada photos
Calderón and political parties concealed information on poverty
Diplomatic cable reveals plot to withhold data until after 2009 elections
The panista [Partido Acción Nacional] administration of Felipe Calderón Hinojosa and opposition parties reached an agreement in 2009 to withhold figures on the increase of poverty in the country until after the legislative elections of that year, in which the Partido Revolucionario Institucional won the greatest number of seats in Congress, according to a report by the United States embassy in Mexico.
Information on poverty is “politically sensitive” and it is more so during a campaign season. The cable from the United States embassy, supplied to La Jornada by Wikileaks, gives an account of an agreement between the government and the opposition to conceal the data.
The cable cites “semi-independent analysis based on official 2008 figures” to show that poverty increased from 42.6 percent of the total population in 2006, the year Calderón assumed the presidency, to 47.4 percent in 2008. Not mentioned is what happened in 2009, when the economy fell into recession.
The change, in absolute terms, corresponds to an increase of six million people, for a total of 44 million, according to Consejo Nacional de Población [National Population Council] data on population dynamics, not quoted in the cable, which is addressed to the State Department and to the National Security Council, as well as to the Departments of Commerce, Energy and the Treasury.
According to the dispatch, several observers, who are also not named, pointed to the increase in international food prices seen in 2006 as the principal cause for the increase in the number of poor in Mexico during the period in question.
After quoting the figures on the increase in the number of Mexicans living in poverty, the dispatch, identified with the serial number 09MEXICO2205 and dated July 27, 2009, reveals: “Release of this politically sensitive information was reportedly delayed by agreement between the government and oppostion parties until after the July 5th legislative elections.”
The message from the United States embassy does not mention the names of the heads of political parties or of government officials participating in the agreement. That year the party leaders were Beatriz Paredes for the Partido Revolucionario Institucional, Jesús Ortega Martínez for the Partido de la Revolución Democrática and Germán Martínez Cázares for the Partido Acción Nacional.
The text contains information tending to confirm the secret agreement on the poverty figures.
Two weeks after the elections of July 5, 2009, the Consejo Nacional de Evaluación de la Política Social (CONEVAL – National Council for the Evaluation of Social Policy) released figures on poverty, although they covered only 2008.
“Using GOM [government of Mexico] statistical agency INEGI’s [Instituto Nacional de Estadística y Geografía – National Institute for Statistics and Geography] 2008 income survey’s figures, CONEVAL, a semi-autonomous government agency… released its 2008 study two weeks after the July 5th legislative elections,” the text adds.
In 2009, the Mexican economy fell into a recession that, for the poorest sectors of the population, added difficulties to those already presented by the increase in food prices seen in 2006 and 2007. To date, neither the federal government nor international organizations have released figures on the number of Mexicans who fell into poverty in 2009. The explanation is that the Encuesta Nacional de Ingresos y Gastos [National Survey on Income and Expenses], the principal source for this information, is carried out only every two years, on even-numbered years. So their data is for 2008 and 2010 but not for 2009.
One of the challenges for the government is to achieve sustainable growth in order to reduce inequality and poverty in a significant way, the cable states. “Unfortunately, figures such as these were destined to be election fodder and it is no surprise that the government delayed their release.”
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US evaluates wealth of Mexicans who consolidated their fortunes under Salinas
They benefited from privatizations, diplomat concludes
The United States embassy in Mexico believes several Mexican tycoons who make the Forbes list of multimillionaires every year owe their fortunes to the privatization of public enterprises undertaken by former President Carlos Salinas de Gortari.
That is the assertion of a dispatch classified as “confidential” supplied to La Jornada by Wikileaks. Dated in July, 2008, on the occasion of the annual publication of the Forbes list of multimillionaires, the cable states, “Mexico, a country where roughly 40% of the population lives in poverty, has 10 people on FORBES’ Magazine’s 2008 list of the world’s billionaires. While these individuals have made important contributions to society via the expansion of services to marginalized areas, job creation, and charitable donations, this concentration of wealth and economic power hinders Mexico’s ability to realize more and deeper levels of competition in key industries.”
The author of the document, which carries the approval of then-Ambassador Tony Garza, dwells on the relation of these millionaires to political power, but also points directly to the juncture at which several solidified their fortunes: the privatization of enterprises undertaken during the administration of Carlos Salinas de Gortari (1988-1994).
The Mexicans included on the list in 2008 are: Carlos Slim (Teléfonos de México), Alberto Bailleres (Grupo BAL), Germán Larrea (Grupo México), Ricardo Salinas Pliego (TV Azteca), Jerónimo Arango (former owner of Aurrerá, later aquired by WalMart), Issac Saba (Grupo Casa Saba), Roberto Hernández (former president of Banamex), Emilio Azcárraga Jean (Televisa), Alfredo Harp (former stockholder in Banamex) and Lorenzo Zambrano (Cemex).
In the document, the United States diplomat who wrote it wondered how said businessmen made it to the Forbes list, a club that requires members have fortunes of at least one billion dollars.
His answer: “It is difficult to make generalizations about how these individuals accumulated their wealth. While most of them inherited their wealth, others are largely self made. And while some in this group have embraced the need for transparency and modern business practices, others prefer their privacy and more traditional ways of doing business. That said, some of these individuals clearly took advantage of shortcomings in Mexican institutions and their relationships with important political figures to expand their wealth.”
The diplomatic dispatch continues: “Several of the business dynasties that these individuals own took off in the 1990s, when then-President Carlos Salinas de Gortari (PRI) began dismantling Mexico’s centralized economy. Salinas sold off more than 1,000 state-run companies from metal foundries to railroads.
“Unfortunately, in some cases, these privatizations ended up creating private-sector monopolies — benefiting savvy businessmen and politicians while leaving the average Mexican out in the cold.”
The document, identified as 08MEXICO2187, is directed by the United States embassy in Mexico to the National Security Council, the Southern Command of the Army, located in Florida, the Northern Command, and to the Departments of Commerce, Energy and the Treasury.
The writer asserts that a “classic example” of an entrepreneur benifitting from political contacts during the privatization of public enterprises by the Carlos Salinas administration is Teléfonos de México, whose principal stockholder is Carlos Slim Helú.
“A classic example of this is Telmex’s privatization. When Slim and his partners purchased Telmex in 1990, the government gave them extremely favorable terms. Not only did the GOM sell the Telmex monopoly intact, it barred competition during the first six years post-privatization… Similarly, Ricardo Salinas acquired the state-owned Imevision television network via auction in 1993, converting it into TV Azteca.”
The cable mentions that aspects of this concentration of wealth and economic power by groups of businessmen cannot be ignored “because many of these individuals control the monopolies and oligopolies that hold back economic growth. Slim, Salinas, and others have used their influence to sway economic policy and work the system to further their business interests and hinder their competitors.”
Tags: Billionaires, Carlos Salinas de Gortari, Carlos Slim, Felipe Calderon Hinojosa, Forbes, Mexico, poverty, privatizations, wealth, Wikileaks