Neo-Colonialism in Colonial Mexico

The central highlands (or altiplano) form the backbone of Mexico. In southern Mexico the isthmus is very narrow; from its peaks one can sometimes see both the Pacific and Atlantic oceans. The further north one travels, the drier and wider the altiplano becomes till it opens out into the deserts of Chihuahua, New Mexico and Arizona. Between these two extremes, nearly three thousand meters above the coastal jungle, lies central Mexico with its colonial towns, some founded by the Spanish, many more recycled from previous owners.

This central altiplano is the ancestral powerhouse of Mesoamerica. The current Mexican government, its Spanish, Aztec, and other predecessors all established their capitals here.

At first glance this might seem like an incongruous list. Surely the Spanish are a special case as they ruled ‘New Spain’ as a European colony? But is the modern-day republic really so different? How much is it possible for a modern nation to control its own destiny? When colonial powers cede control does contact cease? Who steps into the power vacuum? Central Mexico seems like an appropriate place to explore the legacies of colonial power and to delve into their neo-colonial counterparts.

Many European colonial powers when faced with the prospect of governing their colonies in the tropics preferred to live at altitude. The Spanish also liked to stay cool and gladly inherited the Aztec seats of dominance. Mexico City, the Aztec capital became the capital of New Spain; the word ‘Mexico’ is derived from the Aztec word for umbilical centre. Little has changed, Mexico City is now referred to as El Districto Federal, or DF for short in the same way as the US capital is referred to as DC. The Spanish tried to obliterate the Aztec city when they conquered it in the 1500’s but in their haste they failed to complete the job. 1970’s construction workers discovered Montezuma’s main temple buried a block from the civic plaza (Zocalo). It has become a tourist attraction.

The really impressive colonial architecture is not only found in Mexico City but also in the other altiplano cities: Zacatecas, Guanajato, Puebla, Querétaro and, perhaps the most famous; San Miguel de Allende.
San Miguel de Allende is a city frozen in time by an architectural heritage law enacted in the nineteen twenties. Her city districts are called ‘Colonias’ and much of the architecture is from the more splendid periods of colonial opulence. A thriving real estate industry offers palatial mansions to a global market. Affluent visitors are tantalized by monthly bus tours conducted in English that take curious tourists to some of the prettier mansions in the city (many of which are for sale). Many of the buyers are from the US; in recent decades there were more Canadians but the downwardly fluctuating exchange rate in the 90’s thinned their numbers. While geographical factors do play a part in determining who occupies these beautiful properties, the buying power of a nation’s currency is also a factor; you’ll find more British owned property in San Miguel than Guatemalan.

As an Irish citizen of British descent I have always been somewhat conflicted about the notion of ‘colony’. In this beautiful and hospitable place I do not recognize a traditional colony. One could argue that traditional colonies were largely eradicated in the 1900’s with the self-destruction of the western empires about the time of World War One. Absent a foreign army can a colony exist and, if so, how would we recognize it? What exactly is neo-colonialism anyway?

Historically colonization was so much more than property rights. Any successful colonial power understands that a precursor to property ownership is ownership of the mind. What is a paper land title, or paper currency for that matter if it is no longer negotiable? Religion, language, and cultural assimilation played a great part, some might argue greater than military power, in maintaining New Spain for three hundred years.
Mexico is a sovereign nation state born in the traditional manner of anti-colonial rebellion and constitutionally governed by the Mexicans in a federal manner or so it seems. As a nation state, Mexico’s founders learned the value of property the hard way and took some measures to protect their land from becoming the property of an external power. Non-Mexican citizens are not allowed to buy property in Mexico but they can buy and sell a ninety-nine year lease and, recently, Mexican President Fox has made it easier for US citizens to apply for Mexican citizenship.

There are many parallels to this protectionism, take London for example! The Duke of Westminster owns some of the most lucrative leases in the City of London, in fact it is more precise to say the Duke of Westminster owns the City of London. You can’t buy land in certain parts of central London because it isn’t for sale! Why sell when you can lease? This way, the Duke of Westminster has income in perpetuity and the land will always belong to the crown. The title passes down through the British Royal family to the next Duke.

The back of the US Dollar states “In God We Trust” but surely the inverse is true. Since currencies broke with the gold standard their value floats. The gods of international economics determine the relative value of the pieces of paper we carry in our wallets. Whether I get 10.9 or 11.2 pesos to my US dollar or 13 or 14 to my Euro is a decision made in the currency markets of New York, London and Zurich.

Currency markets base their complex decisions on economic precepts as dogmatic and obscure as those of any religion. Certain indicators instantly affect currency markets. They include regularly published statistics such as unemployment figures and stock market indices and government policy changes such as the privatization or nationalization of industries or changes in taxation policies. But how to react to the statistics? Which bible do they use?

These days the tenets of neo-liberalism reign supreme; the bible of the times is the brainchild of the ‘Washington Consensus’. Few religions are run on a consensus basis, the Washington consensus is a consensus in name only. It is written into every unilateral trade agreement the US offers.
Why is a rule book required at all? Couldn’t traders in Zürich and those in New York base their decisions on different tenets? Not really! Traders are continuously making split second decisions in a global currency market, networked by computers with after hours trading. Traders trade for profit. A delayed or bad decision can cost hundreds of millions so a rigid rule system is essential.

For instance, US employment up by 0.2% in November means cheaper legal labor. It could be argued that this has both a positive and a negative affect on the US economy; positive because higher unemployment means cheaper labor, negative because higher unemployment means a higher cost to the government in social security, lowered government tax income and a weaker domestic demand. But how should the markets interpret this statistic in Mexico? What of the effect on legal and illegal immigrants from Mexico? Repatriated earnings is the second largest income source for the Mexican economy? The Mexican central bank may be forced to buy or sell international currencies in an attempt to react to these changes.
There are many aspects to colonial power. Cultural precepts such as architecture, religion and language take centuries to inculcate into the minds of the local population, a process essential to colonial expansion. If you want to move quickly only two kinds of power create change in a short period of time; military might and economic power. Absent a military invasion of Mexico only economic power can result in significant transfer of ownership in a short period of time.

Let’s explore the money relationship taking a practical example. In my pocket I carry Mexican pesos drawn from a US account from a ‘Banamex’ ATM in San Miguel’s town square. In Spanish times, I would be carrying silver or golden coinage the metals that were mined in the Antiplano. Now I get is Mexican paper currency at a daily adjusted rate.

In an attempt to protect their national assets the founders of this state wrote rules into the constitution designed to protect the nascent state. But constitutions are pliant things, especially in Mexico, with more than 400 current amendments and counting. Among those national assets explicitly protected from foreign exploitation and ownership are national resources such as oil and gas and the banks. After all banks are charged with the care of the people’s money and have been rescued in the past by public funds. But wait, that’s old news!

Among other changes in Mexican laws on Foreign Direct Investment, (FDI), restrictions on foreign ownership of Mexican banks were relaxed. The results were swift. All ten Mexican banks were rapidly bought up by Western Banks, mainly based in the US and Spain. Radical but not unusual; at the same time a wave of banking consolidation swept the Western world as well.

For instance, ten years ago, my local bank, San Francisco Federal was bought by First Nationwide. First Nationwide was in turn acquired by California Federal Bank which was snapped up last year to become CitiBank (West). I now draw Pesos from it at Banamex, (also 65% owned by CitiBank). I guess that makes me a loyal Citibank customer? Not one by choice.
Technically I’m a CitiBank West customer using a Banamex teller machine but both entities are owned by the largest bank in the world. A bank whose current leaders include Robert Rubin, once Secretary of the US Treasury, former head of the US National Economic Council, who hailed from Goldman Sachs, then the largest investment bank in the world. Rubin is also credited in his own biography with acting to stem Mexico’s financial crisis and “opening trade policy to further globalization”. If he is not an architect of this ‘consensus’ then who is?

Certain weakened US Federal regulations persist, for now, to keep CitiBank subsidiaries separate in name at least. The rules, designed to restrict the size of any one bank, are a legacy of the horrors of the 1930’s depression in which Citibank was indicted. But CitiBank was also implicated in the loss of confidence that precipitated the crash of 2000? It recently paid a massive fine to New York State for illegal trading practices to settle that case. US rules do not, however, restrict international acquisitions where these are permitted by foreign governments. Cultural barriers exist which prevent renaming the national Bank of Mexico to CitiBank but the logo color scheme, the computing systems, the accounts and the retirement sales are all related and CitiBank’s currency trading operations are still centered in New York.

Is FDI the new colonialism?

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