Tuesday, August 29, 2006

Violent demonstrations reflecting a vast left-right chasm in Mexican politics threaten to shutter Oaxaca state, a tourist region, while protests over a disputed presidential election have throttled parts of Mexico City.

Though there is no direct connection between the unrest in Oaxaca and central Mexico City, both go to a deeper problem of economic inequality in a nation that has a long history of an underemployed work force moving to the United States and elsewhere.

Apart from the protests in Oaxaca, supporters of leftist presidential candidate Andres Manuel Lopez Obrador, the popular former governor of Mexico City, have taken over the national capital’s main square.

Yesterday, Mr. Lopez Obrador accused judges in the nation’s top electoral court of ruling in the interests of Mexico’s elite. He vowed to resist the government of likely President-elect Felipe Calderon or even create an alternative government to collect taxes and help the poor.

“We will never again allow an illegal and illegitimate government to be installed in our country,” Mr. Lopez Obrador told his supporters.

He refuses to accept the results of the July election, which Mr. Calderon is said to have won by a razor-thin margin.

The nation’s top electoral court on Monday ruled that widespread fraud did not occur, and the court is expected to validate the results by Sept. 6.

Analysts say that Mexico’s economy, boosted by the high price of oil, has been performing well this year, making it difficult to gauge any impact from pockets of civil unrest.

“Right now, there are no signs that the political uncertainty is spilling over into the economy,” said Pia Orrenius, a senior economist at the Federal Reserve Bank of Dallas and a former adviser to the Bush administration on labor and immigration issues.

Hotel and restaurant owners in Oaxaca, the capital of the state of the same name, shuttered their businesses yesterday in a counterprotest — demanding that the federal government put an end to the violence that has disrupted their city for months.

The violence in Oaxaca stems from a teachers strike that began in May and expanded into broader social protests, with demonstrators barricading streets, seizing radio stations, setting buses on fire and spraying graffiti on the city’s historic walls.

Protesters are demanding the resignation of the state governor, Ulises Ruiz Ortiz, who has refused to step aside.

“The situation is tense,” said a worker from Casa Oaxaca, a gourmet restaurant and boutique hotel famous for its romantic atmosphere. “People are not traveling, and we have had many cancellations.”

“We are going to close all the hotels and businesses to call on the federal government to intervene. It will be a type of protest,” said the restaurant worker in a telephone interview, asking that his name not be used.

Washington warned American tourists on Friday to avoid the state capital.

Many believe the unrest in Oaxaca is part of a larger problem in Mexico, a country that has been polarized by the vast gap between rich and poor and by widespread corruption.

“We are beginning to see signs of a lack of integration in the country,” said Christopher Sabatini of the Council of the Americas. “These are the knotty problems that Mexico needs to grapple with: the state, parties, the economy.”

For Eduardo Ramos Gomez, president of the U.S.-Mexico Chamber of Commerce, the standoff in Oaxaca is a test case of what could happen in Mexico City and in other areas of the country where similar political and economic conditions exist.

“I think there are people testing the resolve of the government to act to protect the constitution and apply the law,” he said, adding that the Oaxaca protests had been hijacked by more radical political groups.

Mr. Ramos said the government is trying to work through political negotiation rather than confrontation, hoping to placate the population.

But he said the situation in Mexico City, where Mr. Lopez Obrador has sanctioned tent cities around central Zocalo square, is an act of deliberate provocation by the leftist politician.

“Lopez Obrador wants to be the ultimate victim — and what a victim he would be if there were blood on the streets. The administration is cautious not to give any excuses for something that could spin out of control,” Mr. Ramos said.

The uncertainty has prompted at least one U.S. investor to put plans on hold.

Michael Jacobs, who runs a medical-equipment company with a partner in Mexico City, was in the capital last month.

“I basically saw a tense city, the paralysis of the place and the general unhappiness,” Mr. Jacobs said.

“We are crossing our fingers that the tribunal will come through with the most transparent verdict possible — the question is, what will Lopez Obrador do?”

Mr. Jacobs’ Mexican partner said he doubted Mr. Lopez Obrador would be able to turn his protests into a national movement. “Most will not go fight,” said Ramon Aldana Gonzalez.

A taxi driver for one of Mexico City’s top hotels agreed: “There are many people who follow him, but they will not go as far as to fight. And people are getting tired.”

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