Draft but may be quoted.

International Studies Association
Friday, 19 February, 1999
Omni Sheraton, Washington DC - Sales Conference Room, 3:45 pm
information from rich@hoover.stanford.edu


The ´New´ Diplomacy of Economic Incentives:

The German and Chiapas Cases Compared


PAUL RICH
University of the Americas-Puebla
Hoover Institution, Stanford University

GUILLERMO DE LOS REYES
University of Pennsylvania
University of the Americas-Puebla

This paper is supported by a web site at
http://gente.udlap.mx/~rich/rich/index.html

Precis: Reunification of Germany involved staggering amounts of aid, with little doubt at the time on anyone´s part that massive transfers were needed to bring East Germany into the world of neoliberal capitalism. But, granting the emergence of a global economy, are economic incentives to participate in that world always effective? In Chiapas the offer of a boost into the free market economy has not brought an end to the uprising. Disturbingly, the rebels seek something else.
The Truman Doctrine and the Marshall plan are perhaps reminders that economic incentives are not a new tool of statecraft -- but the end of the Cold War and the heightened interest in democratization issues being shown by political scientists means that the whole subject of economic incentives needs the sort of attention which this panel demonstrates. If not new, as a ploy incentives are at least a revived aspect of diplomacy. This afternoon we would like to compare two situations, in one of which most everyone thought economic incentives were an imperative and in another where conventional economic incentives have, at least so far, been unavailing.
At first glance, as examples of economic incentives in international relations, East Germany and the Mexican state of Chiapas seem far apart both in miles and in their political character. But a comparison of East Germany and Chiapas, and of how they reacted to offers to ease their way into the new neoliberal world of consumerism is not quite as strained as it might appear.
Of course East Germany was a separate state, but in the case of Chiapas the south of Mexico has always been somewhat independent (and was in Viceregal days originally assigned to the Spanish administration in colonial Guatemala), independent because of a strong indigenous Indian culture which never quite succumbed to the Conquest and was manifested by insurrections extending over many years: the region comprising Chiapas, Ocho Rios and the Yucatan was involved all during the nineteenth century in civil strife and was only pacified in the late Porfiriato, about 1904.
East Germany certainly had a much higher standard of living than Chiapas, but in comparison with West Germany it was a pauper. Staggering differences characterized the German situation when Soviet will began to crumble and the possibility of one Germany emerged . A comparison of East Germany with West Germany at that moment showed extraordinary inequalities:

Untreated toxic wastes were dumped into rivers, large industrial complexes were built without filters or water purification systems, and radioactive wasters were stored without special precautions. Every atomic power station in the GDR had to be shut down for safety reasons after unification . Forty percent of the multi-family dwellings in the GDR needed major repair and 11 percent were uninhabitable by the standards of the old Federal Republic. In 1991, productivity in East Germany averaged DM 12,000 per capita and in West Germany DM 41,000 per capita.

So the gap economically between Chiapas and the rest of Mexico, and the gap between East and West Germany at the time of reunification, provide two examples of extreme differences in a prospective rapprochement that raises doubts of whether political integration is possible. It has been forgotten that at the time of reunification, the differences between the two Germanys so upset Oskar Lafontaine, the chancellor candidate of the SPD and rival of Chancellor Kohl, that he felt that the solution was to have two German states that would remain in existence for years and only gradually become linked. By no means did Germans all feel that quick reunification was practical. And as for Chiapas being reconciled with the rest of Mexico, the difference between it and regions like Monterrey in Mexico´s north are enormous, causing some to look elsewhere for possible political accommodation, such as in a Mayan flavored indigenous state that would include portions of Central America.

Although a comparison of the German and Mexican situations is, like many political comparisons, an example only capable of being used with great caution, one does have with East Germany and Chiapas two entities with ties to a relatively stronger nation state and with ideological and social personalities that have conflicted with full political unity with the larger state. In both cases, strong economic incentives were held out as an answer to the political dilemma and the results are quite different.
What economic incentives could be offered have been a major factor in both the German and Chiapas discussions of anschluss. In the German instance, the enormous financial commitments made by Chancellor Kohl were largely fulfilled, but were arguably upsetting to the entire European economy, producing a recession. But in the Mexican case, the promises made have largely not been realized and the Chiapas crisis continues, for the reasons that might initially appear surprising. In the Chiapas case it would seem that even if the federal government in Mexico City could deliver on its promises to the rebels of economic incentives, the guerrillas might not accept it.
It would seem then that comparing the two situations could help in discussion about how economic incentives have been used in the 1990s and what their future is as far as statecraft is concerned. We will try to avoid the mistake which is almost inherent in comparisons, that of drawing too tight an analogy, -- but we still feel that a comparison is useful. The East German case is so well known and covered in the literature that we will give rather more attention to the Chiapas situation, the bizarre turnings of which are perhaps less understood than the circumstances surrounding German reunification.
The insurrection in the southern Mexican state of Chiapas that began in January 1994 and which is now approaching its sixth year without a resolution will be remembered in history partly for the Internet-achieved notoriety of the Zapatista guerrillas' leader, the enigmatic Subcomandante Marcos, and for his clever use of the media. The uprising by the Ejército Zapatista de Liberación Nacionalm (Zapatista National Liberation Army or EZLN) was being reported on the net within hours of its start and the soon-to-be legendary pipe-smoking ski-masked Subcomandante Marcos came online immediately.
The first message to go out from Chiapas was a stirring one:

January 1, 1994

We are the inheritors and the true builders of our nation. The dispossessed, we are millions, and we thereby call upon our brothers and sisters to join this struggles as the only path, so that we will not die of hunger due to the insatiable ambition of a 70-year dictatorship led by a gang of traitors that represents the most reactionary groups...To the people of Mexico: We the men and women, full and free, are conscious that the war that we have declared is our last resort, but also a just one...JOIN THE INSURGENT FORCES OF THE ZAPATISTA NATIONAL LIBERATION ARMY.

Marcos at the start of the insurrection proved to be a prolific and eloquent writer: "Cognoscenti speak of over 400 communiqués and letters in a year that, at this writing, still has 100 days left. My eyes have seen a diskette." His "technology is state-of-the-art, a laptop and a printer" and, once written, the letters and essays are often "on the Internet by the next morning". He was soon pursued electronically, if ineptly,by the Mexican government, caught off guard and troubled at being "a helpless victim of the information age" and seeking without too much success to get its counter-insurgency position out on the Net. (Apparently the government has been better at eavesdropping than stating its own case. Confronting somewhat feeble denials, the claim was that "...there IS a whole section of gobernacion that spends all day monitoring lists such as Mexico2000 [one of the major forums for discussing Chiapas] and trying to interfere with the free discussion of Mexico on the Internet generally." Some Mexican discussion lists that had used Mexican servers were in fact relocated their sites out of fears of government meddling.)
That there were charges of sabotage of the rebels' computer links is a tribute to the effectiveness of the Internet and perhaps an ironic reminder that the now disgraced Carlos Salinas won or stole the 1988 presidential election after a supposed computer failure attributed to overloaded circuits and mysterious "atmospheric conditions". Observers noted that, "Both within and outside of Mexico, the Zapatista presence on the Internet has had a powerful effect...[allowing] many people to feel closer to a revolutionary process. A vital part of any revolutionary movement is the degree of hope that is mobilized. Perhaps the most effective outcome of Chiapas on-line has been the boosting of psychological morale of Latin American activists, anti-GATT and human rights workers." The supposedly cold computer medium was praised because "There was a sense of direct connection, of an authentic 'interactive' movement, as groups and individuals forwarded messages, excerpted passages, pinned up tear sheets and posted their own comments on-line."
The government eventually agreed to negotiations rather than try to suppress the rebels, fearful of the worldwide publicity that an army vendetta might provoke. However, weary parley succeeded weary parley without a resolution. The standard offers of roads, schools, hospitals -- all needed -- did not break the logjam. When the electronic blitz of propaganda launched by the guerrillas is examined, it clear that Chiapas uprising has never been about wringing conventional economic incentives out of Mexico City. It is about a rejection of modernity; it is luddite in its nature. The Chiapas rebellion recalls E.M. Forster's remark that "The king died and then the queen died" is only a story, but "The king died and then the queen died of grief" is a plot. Chiapas is a comment-plot on neoliberalism and allegedly the first postmodern one ‹ postmodern according to no less an authority than the celebrated Mexican historian Lorenzo Meyer.
The writer Vázquez Montalbán hails the revolt as "metáfora de la modernidad¨. He comments, "En este sentido, Marcos o lo que significa el movimiento zapatista es de sumo interés no sólo para México, sino para el frente cultural que se establecerá entre globalizadores y globalizados."
The case can be made that Chiapas is truly revolutionary not only in the insurgents having occupied much of the state and not only in a technological but also in an economic sense, becoming a preferred venue for ´post-communist revolutionary anti neoliberalistic statements´´ -- "the intellectual vanguard for an internationalist, libertarian world-view", in contrast with what has seemed at least momentarily to be a virtually universal acceptance of bourgeoisie free market values. A an anti free market and anti economic globalization movement the Zapatistas have attracted enough European intellectual interest to cause Angel Trejo of the news agency Notimex to claim that "Chiapas is a political-military enterprise of European countries who, in the face of the subsequent integration in the European union, want to undermine the influence of ´Yankee´imperialism in Latin America and increase their presence in the business, political, social, cultural areas in the continent. It is fact a new war strategy of the Europeans to combat and reduce the influence of the Monroe Doctrine."
There were obvious advantages to revolutionaries with such a message learning how to gopher and ftp, since distribution of the call to arms via Internet meant circulation around the world in record time, but also an incongruity in such use of technology by a movement wanting to go back to the land and reject much of what Mexico sought out of NAFTA (the North American Free Trade Agreement).Since then the communiques of the rebels have been regularly released on the net, and numerous World Wide Web sites and lists have developed to plot the fortunes of Chiapas.
It would be possible to conclude that the total significance of the use of the Internet in Chiapas was the success with which the rebels could evade government censorship and get their message out. But that it not the entire story: And, while the use of the Internet has also contributed to the charismatic image of Marcos and his movement., providing an audience among the 'digerati'.it raises questions about how the uprising ultimately will benefit the campesino or peasant subaltern class that it claims to represent. The very media of the revolution in Chiapas contradicts the goals of the revolution, which it has become increasing clear are not to seek economic incentives (at least conventional ones).
Marcos has in fact been accused of appealing to computer hackers to the exclusion of campesinos by adopting a curious prose, encabronado (like a furious cuckold) in style. In one sending, he wrote: "For those that no one sees. Greetings brother Zapatista-moles. We have shown thanks for your patient and obscure work. The black night of infamy comes again. The end of our cycle is near. We promise you that we will shine intensely, so as to outdo the sun, before disappearing forever." The prose powerfully projects an image but where are the economic demands?


The answer is that conventional economic incentives are not going to satisfy the guerrillas. Chiapas is more than a demand for roads. It is a protest against the whole world trend towards economic liberalism, a public relations exercise "in which the main weapons of the EZLN were not firearms but the media and NGOs.". And Marcos has been miles ahead in his public relations when compared with Mexican President Zedillo, sometimes called El Nerd or Agua al Tiempo (water at room temperature, after his favorite drink). Zedillo has responded to the revolt with conventional negotiations that have offered standard incentives, perfectly understandable since Chiapas certainly needs economic help. Its entire history is one of deprivation and oppression,.
But Zedillo comes to the table as head of a discredited force, the PRI (Institutional Revolutionary Party), which is not a party in the American sense, but more of a family firm and social insurance scheme which has co opted hundreds of thousands if not millions of supporters by handouts. Decaying, it presides over a country where recollections of Zedillo's 1994 election promises to provide for the "well-being for your family", and his advertisements of himself as a leader who "knows how to do it" produce hollow laughter. He has had no effect on the power structure of the PRI in Chiapas, where personalismo or the rule of individuals will be put ahead of the law, and from personalismo there comes caudallismo, authoritarianism in the person of the cacique or local dictator. In Chiapas, caudallismo retains its force and has long included the control of information and suppression of speech, rampant bribery and an antique but effective system of patronage.
No matter what one thinks about the guerrillas using violence, by any reasonable standards the Chiapas situation over the decades has been outrageous. There is little doubt that justice there, and in many other parts of rural Mexico, has been totally corrupted. This helps explain why in Chiapas the insurgents do not want to join the system: they want to opt out of the system altogether. (

Poignancy is added to the situation by how upbeat Mexicans had been just a couple years before the fall, believing that with the signing of NAFTA and with the booming stock market that a rosy future beckoned. Actually, had anyone bothered to look deeper during the Salinas presidency, which was a smooth exercise in media control, there were disturbing signs that NAFTA would not solve the problem of such considerable residual poverty, that NAFTA might accelerate the problems associated with technological advance and the dislocation of employment that such advance brings, and that NAFTA would add to what was considerable unemployment. In short, the anticipations were not matched by prospective realities. Mexico was pathetically premature in announcing that it had become a first world country.
As the revolutionaries point out, Chiapas' poverty contrasts with its immense natural resources. It produces nearly fifty percent of Mexico's natural gas and sixty percent of its hydroelectric power, along with substantial amounts of lumber, coffee and beef. Ironically, in some areas seventy percent of the homes do not have electricity. Unsurprisingly, this mix of obvious wealth and cutting poverty has contributed to the uprising: "It is precisely in regions with a high percentage of indigenous peoples that can be found a systematic political, juridical, economical violence that has led, in some cases, to the outbreak of violent, armed conflicts. The EZLN, in Chiapas, was born amongst indigenous peoples who, most of all demand dignified living conditions. They prefer, as they say, risking their life in a dignified manner, rather than dying little by little from the diseases of poverty."
However, Chiapas is a reaction not to one crisis in Mexico but to layers of crises. The first set of problems, to which reference has already been made, were debated at the time of the signing of the North American Free Trade Agreement (NAFTA) and were themselves enormous. The NAFTA-sponsored lowering of trade barriers meant that the poor in Mexico, particularly the peasants, faced competing with Canadian and American industry and agribusiness. A corollary was finding the money to introduce new technology into farming and industry, including computers and cyberspace.
Contrary to what many Americans believed ‹ that Mexico would steal American jobs ‹ there were signs if anyone had looked hard enough that thanks to lack of capital and lack of technology, Mexican jobs would be lost to the better trained and technologically empowered American and Canadian labor market. The Chiapas uprising occurred partly because of this perceived threat from NAFTA and from technology. Hence the bittersweetness to the use of the Net to cultivate sympathy for a movement partly fueled by ludditism.
American opponents of NAFTA missed a point which the Chiapas guerrillas appreciate, that the worldwide trend towards technological development demands what is for them an unobtainable constant educational change and continuing capital investment in technology that no negotiation can award them. It has become increasingly clear that the guerrillas see no future in accepting conventional economic incentives because it will be a case of too little, too late. What they want instead is support for an agrarian, almost romantic society in which small holdings will enable them to withdraw from what they see as a neoliberal nightmare.
. "One of the ironies of the twentieth century," remark Joseph Nye and William Owens, "is that Marxist theorists, as well as their critics, such as George Orwell, correctly noted that technological developments can profoundly shape societies and governments, but both groups misconstrued how. Technological and economic change have for the most part proved to be pluralizing forces conducive to the formation of free markets rather than repressive forces enhancing centralized power." Of course Marcos and his band are right that it was obvious from the start that Mexico could not fully take advantage of NAFTA without enormous reform of its educational system and a wholesale upgrading of its technological base. The indigenous in states like Chiapas see NAFTA as progressively making their pitiful situation even worse. They don´t want to join: they want to leave.
Events since the initial uprising have confirmed that view point. Everything in Mexico today is colored by the events of December 1994, when, just as attention was turning to these issues, the Mexican financial system collapsed. The peso was devaluated by 50% and total chaos was only avoided by a controversial fifty-billion dollar bailout engineered by the Clinton administration. Now the chief concern was not how to face the new world created by NAFTA, but how to survive at all. In the first six months of 1995, more than one million Mexicans lost their jobs. Inflation became rampant: gasoline went up by 35% in one jump and then began further monthly increases. Similar price rises involved such staples as food and electricity. Since a similar situation had been faced in the 1980s, no one in Chiapas or elsewhere in Mexico expected anything but years of privation. In 1996 in Mexico the minimum day's wage bought 6 quarts of milk or 2.2 pounds of beans, whereas in 1976 it would buy 21 quarts of milk or 5 pounds of beans. It would buy two and a half pounds of sugar or two gallons of gasoline, whereas in 1976 it would buy sixteen pounds of sugar or eleven gallons of gasoline. Since then matters have only worsened. Some 900 milk distribution stations for the poor have been phased out and state subsidies to basic foods are now completely gone. Gas prices continue to escalate so that bus transportation, on which the majority depend, is now in 199 more than double the cost it was in 1997.
The crisis is not confine to Mexico but it does underline that one has to consider just what happens during the free market transition period when social programs are being dismantled. In Mexico today only 11.37 million of the economically active population of 24.89 million have regular paid jobs. The rest survive with part time employment. in short, since January 1994 when conditions were bad enough to bring about the revolt, little has gone right (no pun intended) nd matters ar even worse.
For the poor in a rural state such as Chiapas, which is called 'Mexico's basement', the situation continues to deteriorate as peace negotiations falter. While it is true that Mexicans are indeed paying dearly for the long PRI rule, which has had an effect on the country's personality as well as its pocketbook, they also feel they are paying a price for neoliberal economics. There is a great deal of self-examination going on, and feeling of impotence, humiliating ingratiations, and ineffectiveness are widespread.
Impotence has not always been a common characterization of Mexico's political personality. The great political cartoonist Thomas Nast portrayed a feisty Mexican in the pages of Harper's Weekly in the 1880s, with cutlass in one hand and pistol in the other. Nast and other cartoonists of the era conceded with their drawings that Mexicans were a kinetic if not always lovable neighbor. With the consolidation of one party control in the late 1920s after the Mexican Revolution, portraits of Mexico change. The rise of the PRI produced the sombreroed dozer, the cartoon Mexican slumped on the ground in a perpetual siesta, a big sombrero shutting him out from the world.
The use of computers during the rebellion has symbolic dimensions that cut both ways, and only on the surface would appear to contradict the stereotypes of illiteracy and backwardness. Marcos use of the Internet underlines the tragedy of the peasants. They are not online and no package of economic incentive sis going to put them online anytime soon. It is their white urbane leader who is online. Like NAFTA, the Internet is widening the gap between the haves and have-nots, even when the haves are trying to help the have-nots.
In July 1996 the guerrilla s made quite clear what they thought of proposals to relocate factories to Chiapas to take advantage of cheap labor and of enticing them to lay down their arms by promises of stringing electric lines to the villages. They staged a conference to protest free market capitalism: "Using the Internet to summon supporters from around the world, Zapatista rebels are staging a mini-Woodstock of the information age ‹ a rally against big business in the mountains of southern Mexico. Swapping e-mail addresses and singing revolutionary songs, leftists from 41 countries on five continents met...for the inauguration of the forum in this remote village [Oventic]."
The Zapatistas further showed their disdain for the entire first world of the World Bank and IMF by a pact with El Barzon, which is the debtor movement of the middle class, farmers, and small businessmen. El Barzon repudiates the bank loans and mortgages which are now in default. An El Barzon leader has warned that, "We will not permit that in this battle for a new Mexico anyone lays hands on a single Zapatista. We will not permit that the worthy men who fight in the Barzon be put in jail." El Barzon claims 850,000 members.
Shortly afterwards the Chiapas rebellion was joined by a guerrilla action in Guerrero known as Ejército Popular Revolucionario or EPR. Incidents in Guerrero have taken place only thirty miles from Acapulco, directed by "Comandante Antonio". The 1999 elections in the state were accompanied by accusations of widespread fraud and the PRI won by only a fraction of one percent of the total vote. As in Chiapas, just what kind of economic intervention would placate the EPR is uncertain.
As the months pass it has become evident that prospects of peace are not going to be improved by suggesting conventional government subventions. in fact, the conventional incentives are exactly what the Chiapas native population fears. While democratization usually is thought about as empowering minorities so they can join the mainstream, these are peoples that have embraced antistatism in the face of decades of authoritarian domination. That they are not now demanding reincorporation into the political fabric is much less hopeful than if they were demanding incorporation into the political process. The richness of Mexico's ethnocultural mixing has become a curse.
As Angel Trejo nots, most observers have missed the fact that this is a struggle with different goals than those of past revolutionary movements. At the same time, while the Internet may be a help to the rebels getting their story out and to promoting the image of Marcos as a "with-it" person, the Internet is not a place where the indigenous agrarian cultures which the Zapatistas claim to defend are cherished: "...such an environment rapidly breaks down not merely boundaries but cultures themselves."
In fact, the use of the Internet increasingly casts doubt on the rebellion as one led by peasant Indians. Marcos himself is an educated, white, technologically savvy media star, a "Zorroized Zapata". Also, he is English-speaking, enabling him to give press interviews to reporters who know neither Spanish nor Mayan. How much a sympathizer with the indigenous such leadership can really be can be debated.
The ultimate direction of the Chiapas rebellion is uncertain. On the one hand, at least according to polls, many Mexicans are unsympathetic to the rebels and more concerned about their own problems then they are about Chiapas. While 52 percent think creating new jobs should be a first priority of government, only 3 percent think solving the Chiapas conflict should take priority. When Cárdenas, the probable presidential candidate of the opposition party PRD (Democratic Revolutionary Party) in 2000, met Marcos during the 1994 election campaign, the effect seems to have been that voters were scared that his leadership might bring on civil war. So for the left, sympathy for the uprising is being tempered by political expediency.
Chiapas then is an example of how economic incentives may not be an answer, or at least economic incentives that promote a direction that one of the parties fears. The Zapatistas, unlike a majority of the East Germans, do not want to join the world of capitalism. They have come to the fore because of fears about NAFTA, as well of course because of the devaluation, and the decomposition of the PRI. Moreover, Zedillio is now a lame duck, and indeed a lame duck without a cooperative legislature. The 1997 Mexican congressional elections saw the PRI lose its majority in Congress for the first time since its founding in 1929. Electoral reforms that have included independent registration and polling booth officials, limits on campaign expenditures, and equal access to the media mean that 2000 may be a relatively clean election but a highly contentious election.
In summary, a conventional view of economic incentives is that people want the chicken in every pot, i.e. that there is a common desire for a middle class, Western style of life and that enfranchisement, along with access to the infrastructure that promises the benefits of bourgeoisie consumerism, will bring a negotiation to a successful close. Most East Germans wanted the life they could see over the Wall.
Most of the Chiapas rebels do not want the life they can observe in Mexico City. When all trust has vanished between combatants, and when the incentives being urged in settlement are seen as destructive of the social fabric whose preservation is the central issue, then the incentives become the equivalent of pouring gasoline on the fire. It is quite understandable why the Chiapas crisis drags on and on. The solution is perceived as being worse than the problem.