Civil Society Participation in World Bank and Inter-American Development Bank Programs: The Case of Mexico

Abstract

For the last decade and a half, policymakers have focused on structural adjustment and liberalization of the economy. State intervention--quite significant for decades--has lessened. After the debt crisis, Mexico signed the General Agreement on Tariffs and Trade (GATT). In 1991, it joined the Organization for Economic Cooperation and Development (OECD). By 1994, Mexico had signed the North American Free Trade Agreement (NAFTA), opening its markets to Canadian and U.S. products. Today, policymakers are content with the results. International financial institutions, such as the International Monetary Fund (IMF) and the multilateral development banks (MDBs), share their enthusiasm and are now supporting the fine-tuning of economic policy, concentrating efforts on the consolidation of reforms. However, important sectors of society assert that reform has negatively impacted family income, restricted access to public services for much of the population, and forced businesses to collapse under the sudden pr essure of foreign competition. Criticism is usually directed at the government, without taking the MDBs' role into account. Nonetheless, the MDBs play an active role: they provide macroeconomic policy advice and participate in a large number of compensatory and sectoral reform loan programs. MDB loans also represent a significant proportion of Mexico's external debt. They do not, however, represent a large proportion of the country's federal revenue or expenditures. As economic have advanced, policy themes have changed. The MDBs now argue that adjustment programs alone will not solve the country's economic problems. In the new MDB view, governments should make a conscious effort to avoid social and political instability by implementing compensatory programs. The impact of structural adjustment should be softened through social projects, while second-generation reforms (generally sectoral) should be consolidated without sacrificing governance. As the MDBs shifted their policy recommendations, they have also begun an internal reform process, creating operational directives that mandate public access to information, environmental protection, and respect for the rights of indigenous peoples through consultation and participation. [1] The MDBs propose stakeholder participation to manage the political costs of adjustment and avoid political instability. In this essay, we analyze how MDB policies and projects pass through the national government and are finally implemented. We argue that the government has significant bargaining power, which it uses to block participation, because Mexico is one of the largest debtors to the MDBs. When participation occurs, it occurs when and where organized sectors of the population are active. Since the portfolios are significant, public disclosure of their terms and conditions is politically risky. This may explain why civil society participation is invited in a piecemeal fashion and even then with serious limitations. Civil Society Under the One-Party System When the Partido Revolucionario Institucional (PRI) became the ruling party in the late 1930s, it established a corporatist structure, affiliating the population to mass party organizations in three sectors: peasants, represented by the Confederacion Nacional Campesina (CNC); workers, represented by the Confederacion de Trabajadores de Mexico (CTM); and popular, represented by the Confederacion Nacional de Organizaciones Populares (CNOP). These organizations acted as a control and support apparatus for the ruling party. For decades, the state also played a central role in development. State-owned enterprises controlled key areas of the economy. In rural markets, the state protected basic crops with import licenses and tariffs. Government companies also provided the majority of the production credit, crop insurance, and fertilizers. After the Mexican miracle in the 1960s, external debt ballooned, casting doubt on the sustainability of the economic model. …