Surprise, surprise! One of Mexico's key anti-drug units has been infiltrated by a drug cartel. This suggests not only that Mexico's best anti-drug units are still at risk of losing even more credibility (government agencies can always lose more credibility), but also that the Mexican government should start to hire more historians. Indeed, this is not the first time that drug cartels gain access to specialized anti-drug units in Mexico. In February 1997, General Jesus Gutierrez Rebollo, a regional commander and one of the most prestigious generals at the time, was arrested for protecting a powerful drug cartel. At the time of the arrest, General Gutierrez Rebollo was head of Mexico's anti-drug agency.

Eleven years after Mexico's drug czar was arrested, the government has disclosed that high-ranking officials at the Unit of Specialized Investigations on Organized Crime (SIEDO) , a pillar of the Attorney General's Office, had been providing strategic information to a violent and powerful drug cartel since 1997. The reports argue that the culprits have been receiving up to $450,000 dollars a month.

These events only contribute to the declining credibility of Mexican law enforcement agencies. These agencies also include the Civil Service Department and its Secretary, who is in fact part of the cabinet. Not even the highest-ranking public officials make $450,000 dollars a month. The Civil Service Department was precisely created to track the wealth of public officials in order to identify cases of corruption. So it is not only the Attorney General's Office that failed to identify informers within its ranks.

Today, Mexico's government seems like a robbing bandit: taxing the citizens and terrifying them at the same time. A few months ago, a teenager was kidnapped and murdered. One of the organizers of the kidnapping was a member of Mexico City's police forces. The failure of the Mexican government to fight drugs and crime in general, and even harbor informers is just another one of these cases.

The impact of the (now global) financial crisis on Mexico has been more than marginal. Not only have remittances fallen dramatically since April 2008, but the Peso fell to a record low against the US dollar in the last few days. It seems that both the Treasury Secretary and the Head of the Central Bank in Mexico underestimated the potential impact of the economic crisis in the United States.

Given the "more than marginal" impact of the crisis on the Mexican economy, several authorities have implemented or proposed a number of initiatives. The auction of billions of US dollars by the Mexican Foreign Exchange Commission of the Mexican Central Bank has slightly stabilized the exchange rate. At the same time, Mexican President Felipe Calderon has decided to increase public spending. This is quite a surprising move, as cities like New York are now aiming at reducing spending (of course, New York has been severely affected by the financial crisis), and the Presidential candidates in the US have suggested that not all their campaign proposals will be easy to implement due to financial constraints.

Thus, in spite of the looming economic crisis, the Mexican government is going to spend more money in infrastructure. According to the authorities, this and another four initiatives, plus the "solid public finances" of the government, will help to cope with the effects of the crisis.

The authorities already suggested that there were no serious reasons to be concerned about the financial crisis. It seems that they were wrong. Now the President is arguing that his plan will prevent more serious problems. The question is whether Mexicans, and the market, should believe that.

An earlier post from this week's blog touched on the human rights debacle, known as the Tlatlelco Massacre, during the 1968 Mexico City Olympics.  This week the BBC interviewed a British journalist, Robert Trevor, that was on the scene as the events unfolded, in what he calls “the most terrifying night of my life”.  He explains that crowds gathered peaceably before the games started, and demanded the resignation of then president Diaz Ordaz, in addition to better basic social services (housing, education, food).  All of a sudden, gun shots erupted on the crowd of 3,000 students.

Journalists were either forced from the scene or arrested.  People outside the square hardly knew what happened.  After the attacks finished, the police claimed 7 of their own had been killed by angry mobs, and 30 civilians were affected by the violence.  In contrast, human rights groups and the protest organizers documented more than 300 innocent civilians were killed.  One of the most chilling aspects was the sheer denial from the police system at the time. Robert Trevor recalls interviewing a mother that went to a police station to inquire about her son, only to be told there was no proof that he ever existed.  As Alejandro mentioned in his previous blog post, those responsible for the massacre and police violence were never brought to justice.  Mexico is now just beginning to recognize the tragedy.

TLATELOLCO TIMELINE (courtesy of the BBC):

“2 Oct 1968: Soldiers spray bullets on demonstrators, number killed unclear. Figures vary between 30 and 300

1990s: After years of official silence, calls for investigations grow

Feb 1998: Legislative commission blames Luis Echeverria, then interior minister and later president. He says the army acted on orders of President Gustavo Diaz Ordaz, who died in 1979

2002: Federal investigation ordered

2007: Mr Echeverria's trial on genocide charges suspended due to lack of evidence

2008: 40 years on, families of victims and disappeared still calling for justice, demanding to know who ordered the massacre and exactly how many died”

George Washington University in Washington, DC contains an excellent national security archive by Kate Doyle that has compiled information about the massacre.  It lists newly declassified documents from both the US and Mexico.  Importantly, President Vicente Fox signed a freedom of information act into Mexican law in 2002, which is now shedding light on the abuses.

"No Queremos Olimpiadas, Queremos Revolucion!" claimed thousands of Mexican students in response to the repressive activities of a government that was about to host the 1968 Olympic Games in Mexico City. Many of those students would end up in prison or in the list of the more than 1,500 disappeared individuals during the "Dirty War" of the 1960s and 1970s. A yet unknown number of students and bystanders were murdered by government forces on October 2 1968, when thousands of protesters gathered in Tlatelolco Plaza in the heart of Mexico City.

40 years after the Tlatelolco massacre, the officials in charge of the infamous activities of government forces during 1968 have not been held responsible. Gustavo Diaz Ordaz, President of Mexico from 1964 to 1970 died in 1979. His minister of the interior and President of Mexico between 1970 and 1976, Luis Echeverria Alvarez, is not only a free man but has just contributed to a new book on his experiences as a high ranking official during those turbulent years.

Although the atrocities in Mexico are not of the same magnitude as in Chile or Argentina, it is remarkable that some sectors of Mexican society have not forgotten about the period. The memory of the events has been well kept by students at public universities, as well as by particular individuals like Rosario Ibarra, whose son disappeared during those years. Mrs. Ibarra ran for President in 1988 and is now a Senator.

Democratic transition is not always followed by democratic consolidation. Consolidation requires of a number of conditions, such as a solution to crimes committed by the forces that opposed or promoted political change. So far that has not occurred in Mexico.

After Monday's worst day of trading in eight years, Mexico's market rallied today (9/30) 933 points to 24888, or up nearly 4%, on fresh hopes of a restarted US government bailout to ease the strain in global credit markets.  Owing to extreme uncertainty in the markets, watch for an overly optimistic or pessimistic market reaction on Thursday morning, after US lawmakers vote Wednesday evening.