Central bank ups interest rate to 10-year high of 8.25%

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December 21, 2018

The Bank of México (Banxico) raised its benchmark interest rate to the highest level in 10 years yesterday, and there are signs it could go even higher in 2019.

The central bank’s board voted unanimously to increase the rate by 25 basis points, as expected, to 8.25%, the highest level since the introduction of a new benchmark rate policy in 2008.

Banxico cited higher than expected inflation and uncertainty generated in part by the new federal government’s economic policies as factors that contributed to the hike, the fourth this year.

“The balance of risks with respect to the expected inflation trajectory has deteriorated and maintains an upward bias within an environment of marked uncertainty,” the bank said in a statement.

The central bank targets 3% annual inflation with 1% tolerance in both directions but inflation in the first half of December was 5%, according to statistics institute Inegi, and 4.87% in the last half of November.

Banxico warned that the minimum wage increases announced earlier this week could “bring about wage revisions that exceed productivity gains and create cost pressures.”

It also said that “the balance of risks for growth is still skewed to the downside and has deteriorated.”

Last month, the bank cut its growth forecast for next year to between 1.7% and 2.7%, while many analysts are predicting that economic expansion will be at the lower end of that range.

In its 2019 budget presented Saturday, the federal government predicted 2% growth although Finance Secretary Carlos Urzúa said that it was a “conservative” estimate.

Banxico also recognized that the value of the peso has recently declined – particularly after President López Obrador announced that the US $13-billion Mexico City airport project would be cancelled – although it rallied yesterday on news that the government had won investor support for an airport bond buyback offer.

“The Mexican peso exchange rate continued to reflect the uncertainty regarding the policies of the new administration,” the bank said.

Bank of México Governor Alejandro Díaz de León told the newspaper El Financiero that Banxico could raise rates again next year if inflation doesn’t begin to trend downwards.

“It’s important for us to remain alert to the balance of risks environment . . . and in case it is necessary, maintain the benchmark rate [at its current level] as long as it is needed or, when appropriate, strengthen the [bank’s] monetary policy position so that inflation resumes a downward trajectory towards the inflation target,” he said.

“What the interest rate hike seeks to do is consolidate an environment of stability. If the anchor of [positive] expectations in the economy was lost, it would be very costly in terms of economic activity . . .” de León said.

In its statement, Banxico also called on the government to provide “a climate of confidence and certainty for investment, higher productivity and a sustainable consolidation of public finances.”

Its 2019 Economic Package was generally described as fiscally prudent and realistic although with some reservations.

According to derivatives market forecasts, there is an 85.6% chance that Banxico will raise borrowing costs next year, and there is some speculation it will do so the next time the bank’s board meets on February 7.

“The guide to the future continues to be hawkish. Therefore, we can’t rule out another rate hike during the first quarter of 2019, particularly if inflation continues to trend upwards,” said Alberto Ramos, chief economist for Goldman Sachs in Mexico.

Alonso Cervera, chief Latin America economist for Credit Suisse, also said that Banxico’s decision was “a hawkish hike,” adding “there’s nothing in the statement that suggests the bank is done hiking.”

However, a survey of analysts conducted by Citibanamex forecast that there would be no new rate hikes in 2019.

Source: El Financiero (sp)

Roma is an exemplar of poetic realism, and a standout Netflix original

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Natalia Greene

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December 21, 2018

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Yalitza Aparicio as Cleo with one of the children in her care. (Archive)

Alfonso Cuaron’s Roma offers a timeless, original portrait of life in Mexico City in the early 1970s in the colonia of the same name. It made a limited cinematic debut earlier this month, and as of last Friday is now available to watch on Netflix.

More like a poem than a movie — in the Hollywood sense at least — Roma is not for those who crave plot, elaborate dialogue or choreographed action sequences. Shot almost in docudrama style, its subject matter is daily life in all its mundaneness.

Happenings are depicted from a distance, always teasingly close but rarely close enough to fully satisfy our curiosity. Many early exchanges in the movie are too quiet, too quick, or too “banal” to capture our attention completely.

But it’s precisely this subtlety — of both content and composition — that enables Roma to stir such honest, universal emotion. Its impact is multiplied by its imagery, which is consistently stunning in its beauty or in its oddness — sometimes both.

It’s easy to imagine Roma laid out frame by frame as a photographic exhibit. The combination of all these elements is what makes Roma stand out — as an exemplar of poetic realism, and a movie that makes a certain mark on the heart.

Roma’s realism is for the most part its distinct lack of plot. It follows the life of a character called Cleo (Yalitza Aparicio) and the family she serves (as the live-in “help”). Almost biographical in style, the film documents Cleo’s daily life and by way of doing so captures the sometimes fickle but ultimately consistent dynamics of her relationship with the family matriarch — Sofi — and her children.

Interspersed with daily life — with a distinct lack of emphasis — are what would classify as major events: Cleo’s confession of her pregnancy, the minor earthquake that shook the city in 1971 and the seemingly accidental incorporation of the Tlatelolco massacre which coincides with the start of Cleo’s labour pains.

Just as in real life, these incidents are understated when they occur, recognizable as major life events only in hindsight, in the broader context of time and history.

Along with realism, Roma provides poetry in equal measure and most impressively does so without compromising the former. As with many of the great 20^th-century writers — most evocative perhaps of Ernest Hemingway or Anton Chekhov, characters’ personalities are exposed through as little as one or two symbolic actions.

A great example is our introduction to Cleo’s ultimately traitorous lover Fermín when he enters a cafe as Cleo and her friend are finishing their lunch. After Cleo gets up to leave with Fermín, he snaps back to her empty place to finish what Cleo has left of her soda. As well as revealing Fermín’s greed, this simple sketch combines with others to create the sense of impending tragedy in the movie’s early scenes, and to signify the depth of character that keeps us engaged.

It seems inevitable that much of the commentary on Roma will focus on its depiction of the dynamic between Cleo and her patrons; the struggle of Mexico’s poorer (by and large indigenous) populations versus the quality of life enjoyed by Mexico’s growing middle class.

The parallel the movie draws between the two main female characters — who represent these opposing social groups — is hard to miss, as is the symbolism of the closing image of Cleo climbing an outdoor staircase, seemingly ascending into the sky.

But whatever social commentary Roma does contain, it’s not deliberate. Any attempt at pointed critique would be drastically undermined by the movie’s conscious nostalgia, perfectly represented by the decision to shoot in black and white.

Above all Roma is a timeless, universal reminder of how the past — and our experience of it — is inevitably, beautifully colored by emotion.

Natalia Greene writes from Mexico City, where she lives in the Roma district.

Chinese automaker to begin construction of assembly plant in 2020

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MND Staff

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December 20, 2018

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A BAIC dealership in Playa del Carmen, Quintana Roo.

Chinese auto maker BAIC is planning to begin construction of a plant in Mexico in 2020 that will start building electric and internal combustion engine vehicles in 2022.

During his third visit to the country, the company’s executive vice-president said BAIC believes Mexico is the best option in Latin America to open a new plant.

“We receive a lot of delegations in Beijing from different states in Mexico and we talk with them about the automotive industry in Mexico and we see potential for investment,” Li Xingxing said.

The state-owned company already uses a production line in a Veracruz facility operated by Mexico-based AT Motors for the final assembly of vehicles it sells in the domestic market.

But because none of the actual manufacturing process is completed in Mexico, each BAIC vehicle pays a 21% import tariff.

From its own Mexican factory, the company intends to sell cars locally, export to countries in South America such as Chile, Colombia and Brazil and eventually ship vehicles to the United States.

Samuel Echeverría, director of operations for BAIC in Mexico, said that eight states are vying to attract the Chinese automotive company.

He explained that the firm is currently weighing its options but suggested that it could ultimately decide on a state in the Bajío region, central Mexico or the southeast of the country. The new plant is expected to generate around 2,000 jobs.

Echeverría said the exact amount that will be invested in the new plant has not yet been fixed but added that it would be less than US $2 billion, a figure that was floated by anonymous company sources earlier this year.

He added that the plant would have an initial production capacity of 20,000 units a year. BAIC currently sells six models in Mexico but sales remain quite low – just 2,000 units in 2018.

However, the company anticipates that domestic sales will increase to between 4,000 and 6,000 next year and for the first time it will enter Mexico’s electric car market.

BAIC already has 34 dealerships in Mexico and plans to open 15 more in 2019 and a further eight in 2020. The company first entered the Mexican market in 2016.

The plant planned for Mexico would be BAIC’s seventh outside China and its first in the Americas.

Source: El Economista (sp)

Luxury apartments on Mexico City military site to help fund new National Guard

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MND Staff

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December 20, 2018

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The military site where luxury apartments would be built to fund the National Guard.

The federal government is planning to build luxury apartments on a military site in Mexico City in order to partially fund the new National Guard.

President López Obrador said this morning that the sale of apartments in the proposed residential development on the Santa Fe site would earn the government between 20 and 30 billion pesos (US $1 billion to $1.5 billion).

The previous government had planned to sell off the 100-hectare site but scrapped the plan in July.

Money earned from the project would go to building 80 “facilities” for the National Guard across the whole country, López Obrador said, referring primarily to barracks.

“I’m going to defend the project because it means getting around 20 billion or 30 billion pesos, which we would use to build the facilities we need for the National Guard . . .” he said.

“If we see that a consultation is required, we’ll consult, when we have the project [ready], we’ll present it but the citizens will decide, that’s the important way to address this issue,” the president explained.

However, later in his morning press conference, López Obrador seemed to indicate that his mind was already made up.

“We’re going to do it because we need the resources, 266 [National Guard] contingents are needed to guarantee public security and 120,000 to 150,000 elements are needed and they require facilities . . . because there are currently no facilities, there are no elements, it’s a disaster, they [the past government] didn’t care about citizens’ security,” he said.

López Obrador rejected any suggestion that Santa Fe – a business district in the west of the capital – would become overpopulated.

He explained that the Secretariat of Defense would be responsible for construction of the project, which would cover 30 hectares of the military site.

The other 70 hectares will become parkland that will link up with the Chapultepec Forest.

“It won’t become saturated, we’re talking about leaving most of the property as green area, it’s not going to be a private property developer [who completes the project], it’s not a private deal, it’s the very government, in this case the Secretariat of Defense who will carry out the urbanization in accordance with regulations . . .” López Obrador said.

Prior to today’s announcement, Interior Secretary undersecretary Zoé Robledo said the government was considering the project but explained that finding the money to undertake it was a challenge.

After the last government’s plans to sell the site became public early this year, local residents argued that a new residential development would place further pressure on already stretched infrastructure in the area.

At the time, real estate experts speculated that the land could fetch up to US $1 billion.

The new government’s National Guard proposal also got a cool reception from some security analysts and several non-governmental organizations, that argued that it would only perpetuate the unsuccessful militarization model implemented by former president Felipe Calderón in 2006 and continued by the last federal government.

Human Rights Watch called the government’s new security strategy a “colossal mistake” and “potentially disastrous.”

Source: Reforma (sp), Milenio (sp)

Government backs off on budget cuts, cites ‘clerical errors’

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MND Staff

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December 20, 2018

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The federal government has backed off on two budget cuts announced last week, explaining that they were the result of clerical errors.

President López Obrador told a press conference yesterday that public universities would receive an extra 4 or 5 billion pesos (US $200 to $250 million) next year after several higher education institutes including the National Autonomous University (UNAM) were highly critical of cuts to their budgets.

“We reviewed the budget and found that there was a reduction in the budget for public universities . . . That’s why the decision was taken to correct the error. An adjustment will be made to the government’s operating expenses in relation to the secretariats, government agencies [and] the executive,” he said.

Under the government’s 5.8-trillion-peso (US $288-billion) 2019 Economic Package, presented by Finance Secretary Carlos Urzúa Saturday, UNAM, the Metropolitan Autonomous University (UAM) and the National Polytechnic University would have seen their budgets cut by 6.2%, 7.7% and 4.7% respectively.

At least two marches had been scheduled for today in Mexico City in protest.

Later yesterday, Foreign Affairs Secretary Marcelo Ebrard said that there had also been a “clerical error” in the allocation of funding for Mexico’s overseas consulates but added that it would be fixed.

This year, consulates received 244 million pesos (US $12.3 million) in funding but in the 2019 budget they were only allocated 42 million pesos (US $2.1 million), an 83% reduction.

“We’ll correct it . . . I suppose or we suppose that it is a clerical error because [an] 85% [cut] is almost like disappearing [the consulates] so we’re going to leave [their funding] as it was,” Ebrard told reporters.

The new government, which took office on December 1, also said that a clerical error was to blame for the failure to include in its new education plan a paragraph that describes UNAM as an autonomous learning institute. That triggered claims that the López Obrador administration planned to strip it of autonomy.

“. . . If it’s necessary we’re willing to add the part about autonomy,” the president said.

Source: El Financiero (sp), Milenio (sp)

Scientists call on AMLO to save vaquita with ban on possession of gillnets

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César Hernández

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December 20, 2018

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The vaquita porpoise is the focus of a letter by scientists to President López Obrador.

A group of prominent scientists has issued an appeal to President López Obrador to issue a ban on possessing gillnets in the upper Gulf of California to save the endangered vaquita porpoise.

Mexico has banned the use of gillnets in the area but enforcing the ban has proved almost impossible.

So the scientists have urged a ban on their possession, which could be enforced by inspecting fishboats before they leave shore.

“This is the only practical option for effectively enforcing the law,” wrote the letter’s signatories, who include Barbara Taylor, a conservation biologist at the National Oceanic and Atmospheric Administration of the United States, and Omar Vidal, representative in Mexico of the World Wildlife Fund.

The letter also stressed the need to protect the vaquitas remaining in the wild, a daunting task that the latest research suggests can still be accomplished.

During an inspection visit carried out in September in the Gulf of California, specialists sighted six or seven vaquita specimens, including a cow with its calf.

Observations suggest that vaquitas live concentrated in a 20 by 40-kilometer area, small enough to be protected with buoys that would impede the entry of fishboats.

Gillnets that are used to fish illegally for totoaba — another endemic fish species from the Gulf of California whose swim bladder is considered a delicacy in Asia — have led to the drastic decline in numbers of the vaquita porpoise, leading to its near extinction.

“Your administration can save the vaquita and set an example for Mexico and the world,” the scientists wrote to López Obrador.

Source: Associated Press (sp)

Mexico will take back migrants awaiting asylum after US changes policy

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MND Staff

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December 20, 2018

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The United States has found a willing collaborator in Mexico’s new government for its “Remain in Mexico” plan for Central American asylum seekers.

The Secretariat of Foreign Affairs (SRE) announced today that it would take back some non-Mexican migrants who have requested asylum in the United States while they await the outcome of their claims.

The announcement came in response to a major change in United States immigration policy, announced today by the U.S. Department of Homeland Security (DHS).

“Aliens trying to game the system to get into our country illegally will no longer be able to disappear into the United States, where many skip their court dates,” Homeland Security Secretary Kirstjen Nielsen said in a statement.

“Instead, they will wait for an immigration court decision while they are in Mexico. ‘Catch and release’ will be replaced with ‘catch and return.’ In doing so, we will reduce illegal migration by removing one of the key incentives that encourages people from taking the dangerous journey to the United States in the first place. This will also allow us to focus more attention on those who are actually fleeing persecution,” she added.

The SRE said in a statement the Mexican government will “authorize, for humanitarian reasons and temporarily, the entry from the United States of certain foreign persons that have entered that country through a port of entry or have been apprehended between ports of entry,” adding that they must have already been interviewed by U.S. authorities and given an appointment to appear before an immigration judge.

It added that it will retain the right to reject or admit the entry of foreigners into its territory but its position will nevertheless be seen by many as a major concession to the United States government.

“Mexico’s government has decided to take the following actions to benefit migrants, in particular unaccompanied and accompanied minors, and to protect the rights of those who want to start an asylum process in the United States,” the statement said.

The SRE clarified that the actions taken by the Mexican and United States governments “don’t constitute a safe third country scheme,” in which migrants would have to seek asylum in the United States while in Mexico.

The rights and freedoms of migrants who return to Mexico will be guaranteed, the statement said, and they will have the opportunity to request a work visa.

Just how many migrants will be shipped back to Mexico is unclear but the head of the National Immigration Institute (INM) said his agency would not be able to receive them in the short term.

Tonatiuh Guillén told a press conference today the institute faces two obstacles. It is not only incapable of handling the additional work, he said, but more importantly the initiative falls outside the Immigration Law.

The New York Times reported that Mexico will be forced to house thousands of people from other countries, particularly Central America. However, Foreign Affairs spokesman Roberto Velasco said the new rule applies only to new asylum applicants and not those who have already entered the U.S.

He also observed there was no agreement on the issue between the two countries. Instead, it was “a unilateral move by the United States that we have to respond to.”

Several migrant caravans have crossed Mexico’s southern border over the past two months, bringing thousands of Central Americans to the country. Many are now in Tijuana or other border cities waiting for an opportunity to request asylum in the United States.

United States President Donald Trump bolstered security at the border in response to what he described as an “invasion,” deploying the army and reinforcing the border fence with concertina wire while implementing a daily “metering” system that limits the number of asylum cases U.S. border authorities will hear.

Stranded on the border, an increasing number of migrants have crossed or attempted to cross the border illegally to turn themselves in to border patrol agents and circumvent the lengthy wait for an opportunity to apply for asylum.

The DHS said today that as it implements its new immigration policy “illegal immigration and false asylum claims are expected to decline” as “fraudsters” will be “disincentivized from making the journey” to the United States southern border.

“Precious border security personnel and resources will be freed up to focus on protecting our territory and clearing the massive asylum backlog” and “vulnerable populations will get the protection they need while they await a determination in Mexico,” it added.

But Amnesty International has a different assessment.

A statement from the United States executive director of the organization, Margaret Huang, said that “this deal is a stark violation of international law, flies in the face of U.S. laws passed by Congress, and is a callous response to the families and individuals running for their lives.”

Published under the heading “Remain in Mexico plan could prove deadly to vulnerable families,” Huang’s response continues:

“While mothers, fathers, and children leave everything behind in search of protection, the U.S. and Mexican governments are collaborating to shut down their access to safety. The end result could be the endangerment of thousands of families and individuals seeking protection.

“Make no mistake — Mexico is not a safe country for all people seeking protection. Many people seeking asylum in the United States face discrimination, exploitation, sexual assault, murder, or the possibility of being disappeared while traveling through Mexico or while forced to wait for extraordinarily long times in Mexican border towns. Women, children, and LGBTI people could face heightened and unacceptable risks.”

Source: Reforma (sp), Reuters (en), The New York Times (en)

Nestlé plant gets cool welcome from coffee growers in Veracruz

By

MND Staff

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December 20, 2018

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Tuesday’s announcement by Swiss food and drinks company Nestlé that it will invest US $154 million in a coffee processing plant in Veracruz has been met with disdain by some coffee growers.

Representatives from several growers’ associations in the state rejected the company’s plan at a press conference yesterday, declaring that it won’t benefit small producers and will damage the environment.

The president of the Coatepec Regional Coffee Council said that Nestlé and other companies such as Starbucks have long exploited and manipulated local coffee producers and that the installation of a new plant would only perpetuate the situation.

“They make an announcement that for us is nothing new because Nestlé has always controlled coffee prices, they’ve exploited coffee growers for decades, not just Mexicans but at a worldwide level,” Cirilo Elothán Díaz said.

Members of the Plan de Ayala National Coordination (CNPA), a group which defends farmers’ rights, said that before the federal government reached an agreement with Nestlé it should have consulted with Mexico’s coffee producers.

President López Obrador met Tuesday with Nestlé México CEO Fausto Costa, who said that the new plant – with a capacity to process 20,000 tonnes of coffee beans every year – will make Mexico the company’s most important coffee-producing country.

The CNPA members also said that any government incentives should go directly to growers rather than the multinational company.

“We have to review what they’re doing, the agreements, and promote [the work of] the coffee producer, give [government] money to the producers,” CNPA representative Ramón Pino Méndez said.

“. . . The way in which Nestlé is going to come in won’t have any benefit at all. It’s a million-dollar investment but it’s for them because the producer isn’t going to get any benefit . . . If Nestlé really made a plan . . . that lifted coffee growers out of poverty we’d be with them but in advance we know that they . . . [will] exploit the coffee growers,” he added.

Pino also said that Nestlé has “a very bad reputation for wreaking havoc on the environment because it promotes cultivation of robusta coffee, which is a crop that grows without shade and therefore causes deforestation.”

Coffee growers are also angry that the federal government slashed funding for Mexico’s coffee sector by more than 50% in its 2019 budget, which was presented Saturday.

The economic package set aside 346 million pesos (US $17.4 million) for the implementation of the government’s Integrated Coffee Plan next year compared to 783 million pesos (US $39.4 million) this year.

Source: Milenio (sp)

Nissan will cut 1,000 jobs as sales decline

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César Hernández

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December 20, 2018

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Jobs will be lost at Nissan's plants in Aguascalientes and Morelos.

Nissan México will lay off 1,000 workers in Aguascalientes and Morelos in response to a decline in sales.

“In response to the challenging market conditions in Mexico, Nissan is adjusting its production levels in its Morelos and Aguascalientes plants,” the Japanese automotive manufacturer said in a statement.

The dismissals will begin in January and affect assembly line workers.

The company did not specify how much it will reduce production, but the Mexican Automotive Industry Association said Nissan’s production was down 9% between January and November, during which time sales declined 14.3%.

The auto maker assembles its Kicks, March, Versa and Sentra models at the plants located in the cities of Aguascalientes and Cuernavaca.

Nisan has invested more than US $5 billion in the two plants over the last 13 years, and annual production has grown from 349,000 units to 829,000.

Source: El Universal (sp)

Presumed boss of Acapulco gang caught for the second time

By

César Hernández

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December 20, 2018

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Suspected leader of the Independent Cartel of Acapulco, José Galeana.

A suspected gang leader believed to be one of the main instigators of violence in Acapulco was recaptured yesterday in the state of México.

José Galeana Galeana has ties with the Beltrán Leyva cartel but is better known as the leader of the Independent Cartel of Acapulco (CIDA).

The federal Attorney General’s office said Galeana, also known as “El Tete Galeana” and “El Viejón,” was arrested in the city of Toluca for the sale and distribution of drugs in Acapulco along with homicide, extortion and kidnapping.

Galeana has already served some time in prison.

He was arrested in 2013 and accused of kidnapping, homicide, carrying unauthorized weapons, being in possession of illegal drugs and organized crime.

The day after his arrest, some 300 people — mostly youths — mounted a blockade in protest on Miguel Alemán avenue in Acapulco.

Galeana was later tried and convicted but despite the severity of his crimes was held in Acapulco’s municipal minimum security penitentiary instead of being transported to a federal prison. There, he rose as one of the main leaders within the inmates’ internal self-governance structure, which was already infiltrated by other cartel members.

Galeana was soon coordinating drug trafficking networks within the jail.

Then, with little explanation, he was released in June 2015, and a new wave of violence followed as he fought for territorial control of Acapulco.

Source: Eje Central (sp)