2
I
NTRODUCTION
The economic crisis that exploded on the international financial scene was signaled by Mexico,
which declared a temporary suspension of payments in August 1982 and thus initiated the period known
as the “lost decade” throughout Latin America. This economic crisis in Mexico was the result of a long
period of debt accumulation, which was $7 billion in 1972 and grew to $87 billion in 1982 (Marchial
1997). Following the 1982 debt crisis, Mexico embarked on major restructuring processes that have
simply changed the economic and political terrain of country. The restructuring appeared to signify the
end of an era of traditional lending practices and economic growth strategies and began a period of
primary emphasis on neoliberal economic policies neatly packaged in what is commonly referred to as
the “Washington Consensus” (Chant and Craske 2003).
By the late 1980s, Mexico appeared to be in an economic upswing with former President Carlos
Salinas de Gortari privatizing hundreds of state-owned companies, most notably the public telephone
company, Telmex. In 1990, Salinas began to sell off 23 banks that had been nationalized in 1982 by
former President José López Portillo. Privatization initiated a renewed period of foreign investment as
well as a quickly growing foreign debt once again. This time, however, the majority of new loans were
taken on by the private commercial sector, such as Telmex and Cemex, the third largest cement company
in the world owned by a group of industrialists in Monterrey. The 220 owners of the newly privatized
banks also took on foreign debt (Marchial 1997). Coinciding with this apparent economic upswing,
government programs and assistance to the rural areas was declining. The terms of credit for small
farmers were breaking down and government subsidies eliminated in favor of promoting commercial
agriculture. In fact, the peasant dream of owning their own land came to a screeching halt with the
announcement that there was no more land to distribute and the signing of NAFTA 1992.
Just as Mexico’s success suggested the end of a difficult economic adjustment period, however,
the economy crumbled again as incoming President Ernesto Zedillo was forced to devalue the peso by
15% on December 20, 1994 and then only 24 hours later the peso became free-floating as bankers wiped
Convention