Mexico, alongside Brazil, has been heading towards 'default' for the past few years. The $50 billion rescue package will be gobbled up all too quickly.
Three years ago, when the 500th anniversary of Columbus's conquest coincided with the creation of the European single market, the significance was not lost in Latin America.
It is a continent deeply marked by a conflict of historical identity: part-European, part-indigenous, part-African and wholly at the bottom of the international priorities of its European progenitors.
It is a crisis of identity which is particularly marked for Mexico. Their deformed integration into NAFTA, alongside the US and Canada, is only the most recent attempt of its most profit-hungry bourgeoisie to resolve Clinton: digging in to US kitty to save Mexico's bacon BRAZIL's government has underestimated the country's December trade deficit by 'somewhere between $47m and $1.3 billion', it has been revealed.
The right wing government has unveiled a package of $5.3 billion in government spending, including cuts in health, education, transport and the closure of two ministries. this conflict.
At the time there were two arguments. one was Wlal lac consolidation of the industrialised world's largest market could only mean an expansion of trade and development.
The other feared the creation of "fortress Europe", entrenched behind tariff barriers to protect its weaker regions, and immersed in internal disruption.
However, both projections were underpinned by the fear that, if Latin America misses its footing among the megablocs of the emergent re-organisation of the world economy, it could be heading for what some have described as a "new dark age of marginalisation".
The facts are clear. For twenty years, Latin America and the Caribbean has been the developing world's worst regional economic performer. In the 1980s per capita income fell back ten years.
Interest payments on its gargantuan external debt make this impoverished region a vast net deve -oped world.
Today - and Mexico is no exception, quite the contrary -exports are still largely primary products with shifting prices Sign here: Mexico's new premier Zedillo and low added value, and its internal economies are bogged down in underinvestment, bureaucracy and bloated fiscal deficits.
In relation to Europe, the ambiguities of the past have deepened. Political contacts grew with the flow of exiles during the period of military dictatorships, and the regional presence increased in political internationals such as the Socialists and Christian Democrats.
Economic links with Europe weakened. The region still supplies almost half Europe's agricultural imports from the Third World, but overall trade with Europe has plummeted compared with that with the US.
Common Agricultural Policy restrictions, high tariff and other barriers, and discrimination in favour of imports from other regions such as the Mediterranean and Africa, are blamed.
Resentment
The treatment of Latin America's external debt causes particular resentment.
Europe accounted for a third of the $415 billion total in 1990, about as much as the US, but because of better reserve provie mącrzeconmes gross social injustices and tearing their own societies apart.
They feel they have a right to demand European co-operation above all over the debt - a brake on development beside which all others pale.
It was Mexico, above all, who believed it possible to break out of this economic and cultural cycie. Its bourgeoisie cherished the vain belief that an easily convertible currency was one of the most important planks of a bridge which would lead the smiling nation to join the first world.
That myth has now been smashed and without any other emotional props it will not just be the Mexicans who will be facing the medium to long-term future with a certain degree of pessimism.
Coughing together The next time Mexico's peso catches a cold, the US and Canada will have little choice but to cough along with it. No amount of 'vigorous debate' about alternative currency regimes will stop that.
Three options have emerged:
• A currency board, in which the central bank issues currency only when it is backed by foreign exchange reserves. Proponents claim that the advantage actually lies with the Mexican government abandoning all preSOCIALIST OUTLOOK No.77. 11 February 1995, Page 11