Bloomberg Anywhere Remote Login Bloomberg Terminal Demo Request


Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.


Financial Products

Enterprise Products


Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000


Industry Products

Media Services

Follow Us

Bloomberg Customers

Businessweek Archives

Mexico's Drug Problems Are Also Nafta's

International Outlook


President Bill Clinton's first official visit to Mexico on Apr. 11-12 was planned as a triumphal tour. It was intended to trumpet the success of the three-year-old North American Free Trade Agreement that has boosted U.S.-Mexican trade 20% annually since 1994. Clinton also planned to celebrate, with President Ernesto Zedillo Ponce de Leon, his winning $20 billion gamble to bail out the Mexican peso two years ago over objections in the U.S. Congress.

But a string of drug corruption scandals in Mexico has suddenly turned Clinton's dream trip into a diplomatic nightmare. He is now fighting to stop his Latin America policy from unraveling altogether. Even the future of NAFTA itself is on the line. Congressional opponents from both parties may introduce legislation to alter or undo the pact after the Administration issues a mandatory report on it in July. "People who felt we were validating a corrupt system by embracing NAFTA now feel their views have been ratified," says a senior congressional staffer.

BLIND EYE. Any hope Clinton had of using Mexico as a lever to spread NAFTA membership is in tatters as Congress loses enthusiasm for close ties with the region. "We ignore drug trafficking by Mexican government long as we can sell more McDonald's hamburgers," complains Representative Fortney "Pete" Stark (D-Calif.)

The trouble began Feb. 18 when Mexico abruptly dismissed Army General Jesus Gutierrez Rebollo, who headed the national antidrug agency, accusing him and 36 aides of being in the pocket of traffickers. Mexican officials failed to warn the Administration of their suspicions about Gutierrez, who weeks earlier had received high-level intelligence briefings in Washington. A torrent of U.S. and Mexican press revelations worsen the picture by the day. Some reports allege that two governors from Zedillo's ruling party also have links to major traffickers. Others allege that the father of disgraced former President Carlos Salinas de Gortari, as well his brother and other kin, were deeply implicated in drug corruption.

The scandals are engulfing Mexico in a big election year. Half of its congressional seats, six governorships, and the mayorship of Mexico City are up for grabs in July. Polls show Zedillo's Institutional Revolutionary Party (PRI), which has dominated Mexican politics for seven decades, stands to lose control of Mexico City and several governorships. With an eight-point nationwide lead, however, the PRI may still hold on to its congressional majority.

HILL CAMPAIGN. Zedillo, a technocrat who is not implicated in the scandals, promised to attack corruption vigorously. But his first attempt to do so by involving the Army, long considered Mexico's least corrupt institution, backfired. Analysts believe he must now completely overhaul Mexico's legal and judicial system. Zedillo snaps that it's absurd to claim that Mexico is "a corrupt country full of criminals."

But that's now the way it looks from Capitol Hill. So Mexico is moving to shore up its badly battered reputation there. It is beefing up the congressional liaison staff at its embassy. And it will use its 41 consular offices around the U.S. to relay positive news about NAFTA to local legislators. The trouble, warns Javier Trevino, undersecretary for international cooperation at the Mexican foreign ministry, is that as Zedillo acts to clean house, the stink of corruption may get worse.

At this stage, though, Mexico doesn't have any alternative. And it must produce quick results, otherwise America's trade courtship with Mexico could end up on the rocks.EDITED BY JOHN TEMPLEMAN By Geri Smith in Mexico City, with Richard S. Dunham in WashingtonReturn to top


Eager to prove that he's back in charge after seven months of illness, Russian President Boris N. Yeltsin is mulling a Cabinet reshuffle. Local newspapers predict that Prime Minister Viktor S. Chernomyrdin will be replaced soon by Yeltsin's chief of staff, Anatoly B. Chubais. But Chernomyrdin, 59, a survivor of other shakeups, could well beat the odds again--even though Yeltsin pinned blame for the government's failure to pay wages and pensions on him.

Kremlin watchers say a more likely scenario is that Yeltsin will slash the ranks of other ministers after his Mar. 6 state of the union message. Labor Minister Gennady G. Melikyan, Defense Minister Igor Radionov, Economics Minister Yevgeny G. Yasin, and Pension Fund head Vasily Barchuk could go, along with several deputy ministers.EDITED BY JOHN TEMPLEMANReturn to top

blog comments powered by Disqus