Chase Bank says Mexico memo 'not policy.'

National Catholic Reporter, March 24, 1995 by Leslie Wirpsa

A Chase Manhattan Bank memo calling for "elimination" of Zapatista rebels in Mexico did not represent official bank policy, but it was written on bank stationery and distributed in a research document representing the bank, according to Chase officials.

Statements in the Jan. 13 memorandum, which have sparked debate in Mexico and abroad about economic and political sovereignty, "in no way represent the views of the Chase Manhattan Corp.," said spokesman John Anderson in a telephone interview March 13.

Written by Riordan Roett, the bank's former consultant on Latin America's emerging markets, the synopsis of the situation in Mexico was distributed just two days before Mexican President Ernesto Zedillo ordered a military crackdown on the Zapatista rebels.

The memo states that the Mexican government "will need to eliminate the Zapatistas to demonstrate their effective control of the national territory and of security policy."

Additionally, the memo calls for a clampdown on democratic reforms, suggesting that "the Zedillo administration will need to consider carefully whether or not to allow opposition victories if fairly won at the ballot box" during upcoming municipal elections.

Civic and grassroots organizations in Mexico claim the memorandum gave Zedillo the cue to abandon peacemaking in January and declare a major military offensive against the Zapatista rebels.

Anderson said author Roett "no longer has a consulting relation with the institution." Anderson did not say whether the Mexico memo prompted the termination of that relationship. Roett had taken a leave from the Latin American Studies Program at the Johns Hopkins School of International Studies to do consulting work.

Roett did not return messages left on machines that answered Manhattan and Washington numbers listed under his name.

Anderson said Chase Manhattan Bank has a long history of business relations with Mexico and that the institution is "committed to playing a constructive and positive role that would help the Mexican economy expand in order to benefit all of its citizens."

He said the bank pays "strict attention to the legal and moral implications of our business" and "would never condone violence."

Magnus L. Kpakol, University of Dallas adjunct professor of economics who recently visited Mexico City, said the Zapatistas rate high on the list of factors that have made banks and market investors uncomfortable about Mexico. Investor confidence in the country dwindled as a result of the Chiapan uprising, political assassinations and the abduction of a banker.

"Those thins scared investor's. Investors want to see a minimization of the things that scared them. Would investors like to see Chiapas disappear? Yes," Kpakol said. "That the investors would tell the government to take aggressive action, I don't know."

Kpakol said he doesn't know if the influence from banks and investors in relation to the Zapatistas is direct. "But nevertheless, there have been clear influences, not only from direct creditors, but from the (International Monetary Fund), from the U.S. government, from people trading in the market."

Kpakol said the Mexican government itself, given the state of economic and financial affairs, "would want to eliminate the Chiapas crisis."

How much influence do banks like Chase Manhattan have on government decisions in a country like Mexico?

"The politically correct answer is to say zero," Kpakol said. "Nobody should have control over the domestic activities of another country. If you want to say they do, you are in a position to prove it."

But, Kpakol said, the Mexican government has two customers. He classified them as "people on the outside" -- external creditors and people involved in the market -- and "people on the inside" -- Mexican citizens.

"Unfortunately, the government owes money on the outside, and when you owe money, you try to appease them," Kpakol said.