So Far From God, So Close to Wall St. | The Nation


So Far From God, So Close to Wall St.

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NAFTA and the neoliberal ideology it represents are certainly not the root causes of narco-trafficking. But they have been major factors in its recent monstrous growth. For starters, the trade agreement created a two-way overland superhighway for contraband; the Mexican drug lords use the dollars they have earned from their exports to import guns, aircraft and sophisticated military equipment from the United States to fight their territorial wars. By wiping out small Mexican farms that could not compete with heavily subsidized US agribusiness, NAFTA also expanded the pool of unemployed young people that provides the narco-traffickers with recruits. And banking integration under NAFTA made money laundering much easier.

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Jeff Faux
Jeff Faux is the founder and now Distinguished Fellow at the Economic Policy Institute. His latest book is The...

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Wall Street's pervasive influence on Obama's change agenda props up banks, while the real economy continues to suffer.

Perhaps most important, NAFTA has helped maintain the corrupt network of Mexican oligarchs. The 1988 presidential election--which the then-ruling PRI had to steal from the PRD to win--shocked the establishment on both sides of the border. By opening up Mexico to US money and influence, NAFTA was a way, as the US Trade Representative said to me at the time, "to keep the Mexican left out of power."

Until the 1980s, Mexican drug (mostly marijuana) smuggling to the north was modest in scale and generally tolerated by successive PRI governments. Their message was: we don't care what you sell to the gringos, but no rough stuff here, keep it away from our kids and of course share a little of the profit under the table. But the US-backed neoliberals who took over the PRI in the 1980s had closer ties with the Mexican cartels. The brother and father of president and NAFTA champion Carlos Salinas--hailed in Washington as a good-government reformer--were widely accused of being connected to the drug business. In Salinas's first year in office his national police chief was found with $2.4 million in drug money in the trunk of his car.

In the 1990s, as the geographically better-positioned Mexican cartels muscled out the Colombians as chief cocaine retailers to the US market, their profits and political influence grew. But so did the rivalry among them and their allied government factions for control of trade routes. Bullet-riddled bodies began showing up on the streets, making the public nervous.

Seeking legitimacy after his 2006 election was tainted by charges of fraud, President Felipe Calderón declared war on the narco-traffickers. It was a popular gesture, but given that the police, the military and the legal system are heavily infiltrated by the gangs, it backfired. The narcos reacted with horrific violence--assassinations, beheadings and mutilations of police and soldiers as well as thugs, brazenly displayed on YouTube. Losing control, Calderón appealed to George Bush II for help. The result: the Mérida Initiative, a $400 million-per-year program to provide aircraft, military equipment and training to the Mexican police and military.

After decades of keeping its distance from the United States, the Mexican military--like the armed forces of Colombia, Honduras and other Latin American countries--is becoming a Pentagon client. In turn, Mexican society is itself becoming militarized. Corrupt local police are being replaced by soldiers who may be slightly less corrupt but who are a greater threat to human rights and democracy. An April Human Rights Watch report identified seventeen specific cases of abuse by the Mexican military, including "killings, torture, rapes, and arbitrary detentions."

To his credit, Barack Obama has acknowledged what his predecessors failed to: that the US demand for drugs and its supplying of arms makes it an enabler in the rise of narco warlords. But he has also made it clear that neither issue is on his administration's agenda. Moreover, just as Bill Clinton carried the water for George Bush I's NAFTA, Barack Obama has endorsed Bush II's Mérida Initiative.

Given the unwillingness of US politicians to deal with the demand side of the market, the Mérida Initiative is not likely to be any more successful in eradicating the drug trade than the $6 billion Plan Colombia has been. The best one can hope for is some sort of market-sharing deal among the cartels that would be implicitly endorsed by the Mexican government while Washington tactfully averts its eyes. Given that in many areas, drug money is the chief source of campaign financing, a PRI-dominated Mexican Congress might be just the right forum for a cynical, but welcome, end to the killings.

Meanwhile, the drug violence has frightened away tourists and investors, making Mexico's recession even worse. Most forecasters expect the economy to contract some 6 percent this year--a huge hit to a country in which 45 percent live on $2 a day or less. Calderón's response is to tread water--rescuing big businesses that speculated on Wall Street derivatives and dribbling out a bit more public spending--while waiting for the United States to once again suck up Mexico's surplus labor.

But even when the US economy recovers, it is unlikely to re-create the credit boom that kept the NAFTA deal afloat. In the post-crash era, the United States will finally be forced to address its trade deficits and its massive foreign debt. Americans will have to slow down consumer spending, increase savings and sell more to--and buy less from--the rest of the world. If Mexico could not prosper during fifteen years of exporting goods and people to a bloated US consumer market, it is hard to believe it will be able to do so when that market has slimmed down.

The entire relationship must be rethought. In this regard, Obama's abandonment of his campaign pledge to renegotiate NAFTA was a missed opportunity. A renewed debate over the trade deal could have spurred public discussion of the failure of neoliberal economics, the "war on drugs" and an immigration policy that ignores conditions in Mexico that drive people across the border. It could have been a forum to think through the question of how continental integration can work for working people rather than just investors. For example, what kind of cooperative transportation, energy and green industrial policies would make the people of three nations--now bound together in one market--globally competitive?

Obama's Wall Street advisers have no more interest in this sort of change than did Bush's. And without a new economic direction, life for the average Mexican will surely worsen and social tensions rise. Some Mexican friends point out that the revolution against Spain erupted in 1810 and the one against the US-backed dictator Porfirio Díaz in 1910. And in 2010... ?

In any event, Mexico's growing troubles will not stay conveniently on the other side of the Rio Grande. Build a ten-foot wall, and desperate people will find twelve-foot ladders. Free trade will, of course, continue to flourish; Homeland Security Secretary Janet Napolitano estimates that Mexican drug cartels are now operating in 230 US cities.

So, thanks to the people who brought you the subprime mortgage disaster, the credit freeze and the Great Recession, the next Mexican revolution may come closer to home than you think.

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