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U.S. Threatens to Bring WTO Case

By Peter S Goodman Washington Post Staff Writer Saturday, July 29,2000; Page EOI

--:(Rldushy Report-- 110 TelecoG"nm'Ulhicatioh:S:

The United States yesterday formally threatened to take the Mexican government before the WOfld Trade Organization for failing to open its telecommunications market to competition, the latest battle over global trade rules in an era when the explosive growth of the Internet is raising the stakes.

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As the industry titans increasingly turn their sights beyond borders, aiming to capture greater Haws of traffic through the global communications network, national governments are finding themselves caught between the pressure to open their markets and the instinct to defend their turf against foreign invasion.

At stake in Mexico is a potentially enormous opportunity. Though the national telecommunications market remains relatively small--worth only about $12 billion a year=i: holds the prospect for dramatic growth.

u.s. telecommunications giants-Jed by AT&T Corp. and World Com lnc.v-have long argued that Mexico's national carrier, TelMex, refuses to share its basic wiring into homes and businesses, impeding their efforts to reach customers.

"These barriers adversely affect US. interests and deprive Mexican citizens of the benefits of competition," U.S. Trade Representative Charlene Barshefsky said in a statement announcing her intent to file a complaint against Mexico at the WTO. The warning followed the collapse of bilateral negotiations aimed at striking a settlement

Mexican officials sharply rejected the U.S. complaint and accused the Clinton administration of using the WTO as a vehicle to press the interests of U.S. companies.

"We're not violating any agreement," said Jorge Nicolin, president of

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U.S. Threatens to Bring WTO Case (washingtonpost.com)

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Mexico's Federal Telecommunications Commission, the agency overseeing the deregulation of the industry. "The. United States is in the bad habit of trying to resolve everything in court. I,

He accused Barshefsky's office of "responding to private commercial interests. They have no legal basis nor facts to sustain their complaint."

The skirmish comes only days after Washington resolved a similar dispute with Japan over complaints that Nippon Telegraph & Telephone Corp. has yet to release its monopolistic grip on its turf; the world's secondlargest telecommunications market.

The conflict also comes as Congress debates legislation that would block Deutsche Telekom AG, the German national carrier, from taking control of Seattle-based mobile telephone provider VoiceStream Wireless Corp, The deal has provoked concerns that Deutsche Telekom--predorninately owned by the German government. .. -would gain an unfair advantage over U.S. competitors and perhaps compromise national security.

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Some say the hostile reception to the German carrier reflects the dawning 1'y(J2Si

of an uncomfortable American realization: Globalization is not a one-way

street. Foreign enterprises could come to dominate the U.S. market.

The telecommunications tensions also highlight a divide between the tidiness of open-market theory and the messiness of free-trade realities, as new entrants collide with entrenched companies rooted.in government.

tty ou have an industry that has either been government -owned or had heavy government involvement," said Clyde Prestowitz, a former U. S. trade negotiator in the Reagan administration and now president of the Economic Strategy Institute, a Washington think: tank. "Once you- have a monopoly, it turns out, it's not too easy to get rid of it."

Barshefsky's announcement follows the surprise election to the presidency of free-trade advocate Vicente Fox, ending decades of rule by the country's long-dominant party, known by its Mexican acronym PRI.

During his campaign, Fox pledged to open the telecommunications market to competition, warning that Mexico would otherwise remain a technological. backwater at a time when the Internet is playing an increasingly vital role in global trade,

At issue is whether Mexican authorities have fulfilled their 1995 pro mise s to open the door to telecommunications competition, or have instead insulated TelMex from rivals, Tellvlex is a national icon whose stock value makes up roughly a third of the entire national stock exchange,

AT &T and WorldCom have erected networks in Mexico, burying fiberoptic cables and seeking to forge links with TelMex in a bid to sell telephone and Internet services. According to U. S. officials, TelMex has

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02/09/00

U.S. Threatens to Bring WTO Case (washingtonpost.com)

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yet to share its network and Mexican authorities have refused to impose regulations that would force it to open its market.

Accordi ng to the carriers, T eIMex charges exorbitant rates for interconnection to its system and subsidizes its long-distance rates with higher local rates in order to undercut the new long-distance threat.

"They are doing what monopolies do," said lohn Stupka, president of alliances and ventures for WorldCom "TelM.ex is protecting the past and attempting to steal the future."

Mexican officials rejected the claim that federal regulators have protected TeLMex.

"Our regulatory and institutional. systems are opening," said Luis de la Calle, undersecretary for international commercial negotiations in the Commerce Ministry. "We have a work plan that is being executed."

Barshefsky said negotiations with the Mexican government ultimately proved futile.

Once the United States files its WTO complaint, it will trigger a mandatory 60-day negotiation period. If a settlement is not reached, the United States could bring a formal case--essentially, a trial--before a panel at WTO headquarters in Geneva.

Washington Post researcher Alejandro Juarez in Mexico City contributed to this report.

© 2000 The Washington Post Company

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02/09/00

Mexicans Applaud Arrest of Generals As Sign of Change (washingtonpost.com)

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Mexicans Applaud Arrest of Generals As Sign of Change

By Kevin Sullivan

Washington Post Foreign Service Saturday, September 2, 2000; Page A16

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MEXICO CITY, Sept. 1 - Two top Mexican army generals have been arrested on drug-trafficking charges ill a rare acknowledgment of collusion between military officers and drug smugglers, suggesting that Mexico's secretive military may be embracing the political changes sweeping the country.

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Officials said today that a two-year investigation showed the two, Gen. Francisco Quiroz Hermosillo, 65, who retired in July, and Gen. Mario Arturo Acosta Chaparro, 61, met frequently with the late Amado Carrillo Fuentes, a powerful drug lord in the northern border city of Juarez, to arrange plane schedules and other details to help Carrillo Fuentes move his drugs. Botb generals are being held in a military jail and face prison terms of up to 50 years each

The military's decision to public1y shame and jail two of its senior officers was hailed here as evidence that the army, like the political system, may be shifting toward more openness and accountability. "The most sacrosanct and closed institution in Mexico has been the military, so this highlights the degree of openness that is starting to be the norm, not the exception," said Roderic A. Camp, a specialist on the Mexican. military who teaches at Claremont McKenna College in California.

Analysts said the timing of the arrests, which were announced by Defense Ministry prosecutors Thursday evening, suggested that the military may be moving to gain the trust of President-elect Vicente Fox, who will take office Dec. 1 as the first opposition party president elected in more than seven decades.

Mexico has been ruled since 1929 by the Institutional Revolutionary Party, or PRI, which has allowed the military to operate as a nearly autonomous organization, It remains unclear how-Fox intends to shape his relationship with the military and how he will deal with military drug corruption, which has often strained relations with the United States"

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02/09100

Mexicans Applaud Arrest of Generals As Sign of Change (washingtonpost.com)

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Fox has said he is leery of the military's anti-drug role, which has led to the same kind of corruption that has tainted Mexico's police forces. But he has said there is no alternative at the moment. In the meantime, he has pledged to wage a hard fight against corruption.

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"It seems the military is sending a message; it's a consequence of the transition that Mexico is living,' said Sergio Aguayo, a leading human rights activist and frequent critic of the military. "They may be saying, '.Mr. Fox, here is proof that we are capable of dealing with our own people.' "

But Gen. Rafael Macedo de la Concha, Mexico's top military prosecutor, said in an interview that the military is simply prosecuting crime. "We are oat looking for anyone's trust," he said "We have always prosecuted everyone who is outside of the law, and we will continue ..

"This hurts our dignity and the prestige of the army, but we have to overcome it," he said. "The army has given clear signals that we are acting according to the law and that we will energetically punish any act of corruption."

The arrests represent the highest-level military corruption charges since the sensational 1997 arrest and conviction of Mexico's top anti-drug official, Gen. Jose de Jesus Gutierrez Rebello, who is serving 71 years in prison--also for protecting Carrillo Fuentes. Gutierrez's case deeply embarrassed officials in Mexico City and Washington who had lavishly praised him as a man of integrity and an emblem of the two nations' resolve to fight drug trafficking

The arrests of Quiroz and Acosta were ajoint effort by military and civilian authorities. The investigation was conducted by the attorney general's office, working partially on information supplied by an unnamed U. S informant, then turned over to military officials for prosecution.

Camp said the military's decision to prosecute the two generals and publicly acknowledge their ties to drug lords is a sharp departure from how previous cases were covered up by Mexico's military and political leaders. When Adm. Mauricio Schleske was forced to resign by President Carlos Salinas de Gortari in 1990, for instance, the real reasons were never made public, he said, adding that Mexican media disclosed much later that Schleske had been fired for using naval ships and ports to help smugglers move drugs.

In another case, army soldiers and police officers exchanged gunfire in a drug-related dispute. Camp said several army officers were punished, but the military never admitted that the case was related to drug corruption.

The Gutierrez case marked the first time a top military official was not

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Mexicans Applaud Arrest of Generals As Sign of Change (washingtonpost.com)

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afforded the near total impunity that military officials have enjoyed over the years. Human rights activists say the military has been involved in hundreds of cases of killings, massacres and disappearances over the decades, mainly in Mexico's recurring struggles against anti-government guerrillas.

Human rights groups said Acosta has been involved in many of the army's most notorious operations in the past 35 years, including the 1968 student uprising in Tlatelolco square, in which hundreds of demonstrators were killed. Activists said Acosta is also suspected of being involved in the disappearances of more than 500 people during his years working in anti-guerrilla activities in Guerrero state.

Aguayo said Quiroz, one of the military's highest ranking officers, was a key leader of the so-called White Brigades, secret military and paramilitary squads that were deployed to strike at guerrillas. Those brigades have been blamed by human rights groups for numerous killings and disappearances.

Researcher Alejandro Juarez Zepeda contributed to this report.

e 2000 The Washington Post Company

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02/09/00

For Mexicans, a Bump on the Road to Trust (washingtonpost.com)

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Join The Free Worldl

For Mexicans, a Bum.p on the Road to Trust

By Kevin Sullivan

Washington Post Foreign Service Saturday, September 16, 2000; Page Al3

--Special ...... 'n"'.'T-_

Mexico Chooses Fox induding complete Post cove fa ge cf th e electi . .on.

MEXICO CITY, Sept. 15 - Genocide, torture and secret police in dirty wars. Disguised identaies and echoes of unspeakable evil. A mysterious

and gruesome suicide by razor blade.

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There must be easier ways to register a car.

What started as a mundane bureaucratic initiative=a national car registration program to fight Mexico's car-theft epidemic-vhas swirled into a national soap opera filled with tragedy, mystery and improbable plot twists. The debacle has shown that despite great optimism about the political changes sweeping across Mexico these days, many Mexicans remain fundamentally suspicious about their government.

"Our politics and our so-called democratization make me laugh," said Ramon Rivero, 32, a conference planner in Mexico City. "People have never trusted the government because the government doesn't know how to respond to our needs. "

The car registration program, known as Renave, has been the government's worst public relations nightmare in recent memory. It exploded last month when Ricardo Miguel Cavallo, whose Argentine company won the contract to run the program, was accused in a Mexico City newspaper of having been a secret police torturer in Argentina's "Dirty War" two decades ago,

Cavallo was arrested as he attempted to flee to his homeland, where most war criminals have been granted immunity from prosecution. He remains in a Mexican jail. This week the same Spanish judge who tried to bring former Chilean president Augusto Pinochet to trial announced he is seeking Cavallo's extradition to Spain on charges of genocide, terrorism and torture.

Then, a key commerce ministry bureaucrat involved in the car

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For Mexicans, a Bump on the Road to Trust (washingtonpost.com)

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registration program was found dead on the side of a road with his neck and wrists slashed. The death of Raul Ramos Tercero, a Stanford University PhD and father of four, was ruled a suicide. Ramos left six suicide notes in which he blamed the media for creating "an atmosphere of hysteria" over Renave that pushed him to kill himself. But many Mexicans, who have seen repeated instances of suspicious suicides and unsolved murders in high-profile cases, suspect something nefarious.

The car registration fiasco began with the basic suspicion many Mexicans feel toward their government. The plan originally called for all automobile owners to pay a fee of $10 to $38--an amount that has been drastically reduced--depending on the age of their vehicle. The money was earmarked to pay for a new computerized data bank that would finally give police some modern tools to stop an epidemic in Mexico in which 431 cars are stolen each day.

Renave is also aimed at protecting car buyers and owners. Under the current system, for example, a person buying a used car in Acapulco has almost no way offinding out if the car was stolen the day before in Mexico City. The national registry would make such checks simple.

Still, when Renave was first announced, many people immediately suspected that it was another government grab at their wallets.

"It's always the same story," said Ricardo Jimenez Reyna, 40, a journalist from the state of Baja California. "What change is there? There is a change offaces, but not attitudes. Corruption, bribes, secret movements of money. It's part of our culture. It's in our genes .. "

Officials involved with Renave acknowledged the failure of their efforts to make the public understand the program. And public suspicions led to a strong anti-Renave campaign in the Mexican media, even before the problems surfaced with Cavallo

"In Mexico, for many years there has been a lack of trust about what the government does with taxes," said a senior commerce ministry official involved in Renave.

"We never thought it would be a huge political debate," said the official, who, like other officials involved with the program, saw Renave as an obvious solution to a pressing need.

For example, he said, the government does not know how many cars are 00 the roads in Mexico. And Mexico's archaic system of state-by-state car registrations was blinding police who were trying to investigate car thefts. Officials estimate that the Mexican stolen car business is worth $800 million to $1.2 billion a year. A computerized national registry, officials argue, is a simple step toward a more modern Mexico with less cnme,

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For Mexicans, a Bump on the Road to Trust (washingtonpost.com)

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But the program was greeted with howls of protest that the plan was unfair, unnecessary and even unconstitutional. Several states refused to go along when it went into effect last May.

The ministry official, who asked not to be identified, said three factors sapped credibility from Renave: the Cavallo disclosures, the Ramos suicide and the fact that the ruling Institutional Revolutionary Party, or PRI, lost in national elections in July. The program suffered from a lame duck administration's lack of clout to push through a new initiative that came at a cost to taxpayers, he said.

This week; under mounting pressure, the commerce ministry took control of the program. Officials said the ministry will run it and continue to oversee registrations of all cars. "The work from now on is to gain credibility," the official said.

That may be difficult when it comes to people like Jorge Martinez, 22, a college student who works in a library. "The government doesn't work for the people," he said, "even when they try."

Researcher Alejandro Juarez Zepeda contributed to this report.

© 2000 The Washington Post Company

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16/09100

Records Show PRI Got Millions in Mexican Bank Bailout (washingtonpost.corn)

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Records Show PRI Got Millions in Mexican Bank Bailout

By Kevin SuI/ivan

Washington Post Foreign Service Friday, September 22, 2000; Page Al8

--Special • M~ico Chooses FQx including complete Post coverage of the election.

MEXICO CITY, Sept. 21 - After years of stalling, the administration of President Ernesto Zedillo today disclosed secret banking records confirming what many Mexicans long suspected: Mexico's ruling party

received millions of dollars from a taxpayer-funded bank bailout in 1995.

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Forced by an unprecedented Supreme Court order last month, the government handed over to Congress 3,226 pages of records on Banco Union, one of many banks involved in the rescue, which cost taxpayers at least $100 billion,

Opposition politicians have been calling for release of the records for years, suspecting that the ruling Institutional Revolutionary Party, or PRJ, and its wealthy contributors and friends were the main beneficiaries of the bailout.

Details were emerging slowly tonight, but a government statement announcing the hand over confirmed that various PRJ organizations received at least $5 million in benefits from the bailout=about $4 million to the party's national executive committee and about $] million to the party organization in the state of Tabasco.

The party organizations had outstanding loans from Banco Union. When the bank failed, the government took over those debts, effectively paying otfPRI loans with taxpayer money.

"The amount is not important, it's the fact of how they covered their tracks and tried not to disclose this information," said Fauzi Hamdan, an opposition legislator who agitated for the records' release.

Ricardo Garcia Cervantes, president of the Chamber of Deputies, told the Reforma newspaper he will form a committee to review the documents, He said if wrongdoing is found, the records could be turned

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09/22/2000

Records Show PRI Got Millions in Mexican Bank Bailout (washingtonpost.com)

over to the judiciary for prosecution.

The bank failures of 1995, and the sharp currency devaluation that preceded them with depression-like effects that still plague the nation, were devastating to already-low public confidence in government.

Mexicans had become accustomed to PRI officials enriching themselves at public expense. But rumors of wealthy friends of the PRJ being bailed out while average Mexicans saw the value of their earnings plummet generated great anger.

Many here believe that anger carried through to national elections on July 2, when Vicente Fox became the first opposition candidate to win a presidential election since the PRI was formed in 1929.

An independent auditor hired by Congress issued a report on the bank bailout last year. Much of the information in the audit remained secret until two months ago, when opposition legislators revealed the names of 3,300 people who had questionable loans tied to the bailout. Many of them were wealthy business leaders with close ties to the PRI. The audit also revealed a loan of more than $400,000 to the PRJ committee in the state of Jalisco, which was covered with taxpayer money.

Today's disclosure represented the first official admission that the PRI benefited directly from the bailout and the first acknowledgment that those benefits were in the millions of dollars.

The records were more tantalizing because the govermnent had refused to release them to the auditor. Opposition legislators had wanted Banco Union's records because they suspected Zedillo may have received millions from the bank [or his 1994 campaign. It was not clear tonight what the records showed on that subject.

Researcher Alejandro Juarez Zepeda contributed to this report.

© 2000 The Washington Post Company

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