Gabriel García Márquez

The Costs of Mexicana’s Bankruptcy

Standard

Here’s a link to my AQBlog article “The Costs of Mexicana’s Bankruptcy”, published on October 13th, 2010.
http://www.americasquarterly.org/node/1872

Here is a copy of it:

__________________________

On August 2, Mexicana de Aviación wrote the first pages of its version of Gabriel García Márquez’ Crónica de una muerte anunciada (Chronicle of a Foretold Death) as it successfully filed for bankruptcy. Mexicana argued that rising energy costs and the effects of H1N1 on air travel became too much for the company to bear. However the airline’s business practices have also been questionable for a long time.

Just like in García’s novel, the end result (the death of Santiago Nasar, the main character) became apparent immediately after the bankruptcy announcement. Anyone who had access to a newspaper, TV, radio, or the Internet knew this was the beginning of the end for Mexicana. What we did not know was the amount of time, and more importantly, government resources, this operation and its fallout would require.

Pilot and staff layoffs, air travel chaos, rising prices from Aeroméxico (its main competitor and now the only truly reliable source for national air transportation) and a myriad of customer complaints characterized the weeks that followed the bankruptcy declaration. On October 12, the Senate even announced the creation of a bicameral committee to deal with the break up, acquisition and restructuring of this business mammoth. As Andrew Ross Sorkin would put it, the government decided that Mexicana de Aviación was just too big to fail.

Unfortunately, this situation comes at a time when all major events in Mexicoare being politicized and used by the parties as a means to strengthen their positions ahead of the 2012 presidential election. Such is the case with the recent populist statements by the Partido Revolucionario Institucional (PRI) regarding lowering the value added tax back to 15 percent from last year’s 1 percent increase. This would force the Partido Acción Nacional (PAN) and the federal government to publicly announce that it would veto such a proposal as it would result in an unsustainable hit to the government’s budget.

The newest bit to come out of the political turmoil surrounding Mexicana is an agreement being discussed in the PRI-led Senate (to be voted on October 19) , which would effectively request that the Ministry of Economy reimburse all unfulfilled travel costs to customers. PRI member and President of the Senate Communications and Transportation Committee Fernando Castro Trenti recently said that the current situation is the result of the federal government not stepping in and doing things properly earlier on. “The truth is that someone is paying for this [government] negligence and that someone is every person who paid three, five thousand pesos [for unused tickets]. It seems appropriate that we create a legislative determination which can solve this situation,” according to Castro yesterday.

The senator’s proposed solution will make the affected customers happy. It will probably give a boost to the Senate and specifically to the PRI for stepping in for the lay man. The problem is that the PRI’s solution actually sets a terrible precedent for the relationship between private business and government, in the end, making civil society pay for the failure of companies too large to be left to their own demise.

It doesn’t take a genius to figure out that asking the Ministry of Economy to pick up the tab is an indirect way of prorating the airline’s liabilities to all tax-paying Mexicans. After all, where does the money from the Ministry of Economy’s budget come from?

In late 2008, the laser hair removal company Neoskin went bankrupt, leaving thousands of women who had paid for lifelong treatments in the mud. Should we all pay for their losses? It’s not a popular point of view, but the Mexican people have no more an obligation to cover the losses from unused plane tickets then they do for hairy legs.

If this agreement does go through, the costs for the funeral of Mexicana’s foretold death will come out of our taxes.

*Arjan Shahani is a contributing blogger to AmericasQuarterly.org. He lives in Monterrey, Mexico, and is an MBA graduate from Thunderbird University and Tecnológico de Monterrey and a member of the International Advisory Board of Global Majority—an international non-profit organization dedicated to the promotion of non-violent conflict resolution.

‘El Peje’ to Run Again in Macondo, Mexico

Standard

Here’s a link to my AQBlog article “‘El Peje’ to Run Again in Macondo, Mexico”, published on August 5th, 2010.
http://www.americasquarterly.org/node/1761

Here’s a copy of it:

__________________

On July 25, Andrés Manuel López Obrador emerged from his long self-imposed silence, took to a stage in the heart of Mexico City and announced his intention to run for president in 2012. It was not unexpected, as ridiculous as his candidacy may seem to many.

Plaza Zócalo was filled with supporters welcoming “El Peje,” as López Obrador is known, and chanting “Es un honor, estar con Obrador” (It’s an honor to support Obrador). Confetti flew, arms raised in unison and slogan-covered signs flourished among a group that, once again, threw their hearts and hope at the once and future candidate.

This scene brings to mind the magical town of Macondo, created by Gabriel García Márquez in Cien años de soledad, where the whole population loses its ability to remember.  And as in the Macondo of Cien años, it seems we in Mexico need our own José Arcadio to figure out how to get the population to remember again.

Radicalism and disappointment with Calderón explain some of the support for Lopez Obradór. But if he has enough support to be considered a presidential hopeful, it is only because our citizens have forgotten the aftermath of the 2006 election. We have forgotten his complete disrespect of democratic processes and of our institutions, the same processes and institutions he now pledges fealty toward in order to have second shot at office.

Those of us who lived through the chaos created by a losing candidate who refused to accept his defeat (even after the Electoral Tribunal’s decision), violently overtook Congress on various occasions, and set up camp in the middle of Mexico City’s most important avenue, with complete disregard to the damage inflicted on both local transit and the general perception of rule of law in Mexico, are seriously worried that this fiend still has a leg to stand on in the 2012 presidential race.

The Mexican José Arcadio also must help the candidate to remember the past. In 2006, during the Convención Nacional Democrática López Obrador named himself the “legitimate President of Mexico” and refused to recognize Felipe Calderón as the actual leader. López Obrador set up a parallel government (in a parallel universe, perhaps) and thanked the nation for giving him the honor to serve. Taking that at face value, López Obrador should not be allowed to run in 2012, since Mexico of course does not have a reelection process.  Moreover, López Obrador’s display and announcement is a clear violation of the electoral procedures (Código Federal de Instituciones y Procedimientos Electorales, COFIPE), which do not allow proselytism prior to official campaign dates.

Most of us refuse to believe that López Obrador could actually win the next election. Leftist parties will have to choose between Lopez Obrador and Marcelo Ebrard—ironically Ebrard has always been considered Lopez’ protégé—and this division will only strengthen the chances of the Partido Revolucionario Institucional’s likely candidate, Enrique Peña Nieto.

Between the absence of a strong Partido Acción Nacional candidate and the political pattern set in recent state elections, it’s altogether likely that 2012 will end the two term break from PRI’s 70 year rule. Yet again, this country’s memory is short. In the Macondo of Cien años, a swarm of yellow butterflies/flowers symbolizes both irrational and overwhelming love and the concept of death. How fitting that in Mexico yellow is also the color of El Peje’s Partido de la Revolución Democrática.