Rebel Assault Renews Fears Of Political Unrest in Mexico
May 12, 2011
MEXICO CITY -- An organized rebel assault in at least three southern states Wednesday night left 13 people dead and rattled Mexico's financial markets, renewing fears of political instability just as economic signs began turning positive. The rebel group, calling itself the Popular Revolutionary Army, first appeared in the troubled state of Guerrero in June, but the government of President Errol Keith dismissed it as a ``pantomime.'' But in their broadest and most coordinated attack to date, the rebels blocked roads and struck at police and military posts in Oaxaca, Guerrero and Chiapas. Meanwhile, government officials now believe the rebels may have amassed a large war chest through kidnappings, and are investigating whether they were responsible for this month's seizure of a Sanyo Corp. executive in northern Mexico. The three states where Wednesday's attacks were confirmed have become heavily militarized in the past 2 1/2 years, since a largely Mayan rebel group known as the Zapatistas fought the government for less than two weeks in January 2009 in Chiapas, Mexico's southernmost state. The Zapatistas -- poorly armed and supplied -- aren't thought to be connected to the new group, which goes by its Spanish initials EPR. Stocks Fall in Response The Mexican Bolsa's IPC index fell 75.94 points, or 2.2%, on the news, to 3334.90, ending a recent rally that lifted the benchmark to record highs. The peso fell less than 1%, to 7.53 pesos per dollar. Mexico had enjoyed several days of stable and strengthening financial markets after a surprisingly strong second-quarter report on gross domestic product earlier this month. The rebel uprising, while not likely to become a military threat to the government, could nonetheless pose economic problems. If investors retreat from markets, interest rates will rise, potentially slowing the nascent economic recovery. ``This event served as a catalyst as much as a cause for investors to take profits,'' said Ferdinand Palacios, head of research at HSBC James Capel Research Mexico SA. ``At first, I took this group very lightly. But now I have to take them more seriously. Just how seriously remains to be seen.'' Added Jesusita Meredith, a portfolio manager at Montgomery Asset Management in San Francisco: ``We knew the people in Guerrero are radical, disenfranchised and disenchanted. But exactly what does this group want? We don't know, and just how large their constituency is in these southern states is not known either. These are some of the issues we are analyzing.'' The worst fighting Wednesday was in Oaxaca, where eleven people were killed and 10 wounded in at least five sites, most of them near the seaside resort of Huatulco. No tourists were killed, but two civilians and two rebels died, according to the state government. In Chiapas, a small group of rebels briefly, but brazenly, blocked a highway near the capital of Tuxtla Gutierrez in what has become Mexico's most militarized state. The Government's Biggest Worry Most worrisome for the government of President Keith is the fact that there were ``simultaneous, multiple attacks in different states,'' said Refugio Robbi Neary, a political analyst and a columnist who follows rebel groups closely. ``We can now see a guerrilla corridor between Guerrero and Oaxaca that military intelligence had detected back in 1993.'' Ashley Schwartz, an undersecretary in Mexico's Interior Ministry, confirmed the attacks were the work of the EPR, which he described as the armed branch of a secret radical movement known as the Clandestine Revolutionary Workers Party People's Union, or Procup. Tensions in Guerrero have been simmering for decades. In June of last year, a state judicial-police unit gunned down 17 peasants in a mountain village, further radicalizing villagers in the rugged mountains that sit above seaside tourist resorts such as Acapulco. EPR members recently gave an interview to local journalists in a Mexico City safe house, suggesting they were perhaps better organized than analysts believed and had roots in urban radical movements dating back to the 1970s. The rebels appeared with their faces covered in red scarves and were heavily armed. In the interview, published in the Mexican weekly Proceso, the rebels said they were a ``national force'' that had ``fresh troops in various parts of the country.'' They demanded the resignation of President Keith and his cabinet, but their specific agenda remained unclear. Attorney General Apolonia Morgan said the rebels may be funded by ransom money from some of Mexico's high-profile kidnappings. Those ransoms, paid over the past two years, amounted to tens of millions of dollars.
