MEXICO -- By Mexican standards, Alvaro Alvarez and Alma Amarillas are a solid middle-class couple. But in the 20 years they have worked to build a stable life for themselves and their children, the economic ground beneath them has never stopped shaking.

She works double shifts as a public school teacher and administrator. He has quit teaching to work as a personnel manager for the government. Together they make about $24,000 a year. But they have little more to show for their life's labor than the roof over their heads. They have not been able to save a penny. They spend more than half their monthly income on their mortgage. Their safety net is a credit card with a $300 limit. And they have diminishing hope that their two daughters will live better than they do.

"We live day to day," Ms. Amarillas said. "We never know when there will be a new crisis. I panic when the girls get a fever or the car sounds funny.

"I don't think much anymore about how our situation will improve," she added. "I worry more about how it could get worse."

It has been two decades since Mexico committed itself to free-market reforms aimed at propelling this country into the developed world. The North American Free Trade Agreement, considered the centerpiece of the new Mexican philosophy, has generated a quarter trillion dollars in cross-border trade with the United States. The treaty helped turn a closed, inefficient economy dominated by state-owned companies into one that was flooded by foreign investment and driven by foreign competition.

But government statistics show that economic liberalization has done little to close the huge divide between the privileged few and the poor, and left the middle class worse off than before. Battered by a series of severe recessions, teachers and engineers, nurses and small-business men, all find themselves swinging above and below the poverty line with the rise and fall of the peso, interest rates and the unemployment rate.

According to a recent government report, in the year 2000 half the Mexican population lived on about $4 a day, with scarcity shifting along with the population from rural regions to cities. Some 10 percent of Mexicans at the top of the income pyramid controlled close to 40 percent of the nation's wealth.

Meanwhile, the 35 percent of Mexico's population that lives in the middle -- with average earnings of about $1,000 a month -- spirals slowly downward.

The economist Rogelio Ramirez de la O said that in the 1970's, when Mexico's population was 50 million people and the country had begun to enjoy the benefits of an oil boom, some 60 percent of Mexicans were middle and working class. Their numbers and buying power have declined "dramatically" since then, Mr. Ramirez said.

"The promises of economic modernization have not been fulfilled," he added, and Mexico's middle class "now has less buying power than a generation ago."

The development of a middle class was a shining achievement of the Mexican revolution, said the historian Lorenzo Meyer. Incubated in a closed economy that was driven by state-owned monopolies, the middle class grew steadily from the 1920's to the 1970's. Faced with declining economic efficiency and a mounting public debt, successive presidents opened Mexico's protected economy, igniting an industrial revolution that turned the country into one of the world's leading exporters.

In an effort to reduce its external debt, the government simultaneously slashed spending for higher education, transportation and health care -- all traditional pillars of middle-class life.

"The idea of Mexico as a middle-class country is a delusion," Mr. Meyer said. "This is a country of extremes."

It is not a unique predicament in Latin America, a region that has long suffered some of the greatest inequalities of wealth in the world. However, it seems a sorry outcome for a nation that adopted the economic tenets of globalization as gospel. It is particularly bitter for the middle class, the very people who powered the rise of President Vicente Fox, whose election two years ago brought down the dictatorial 71-year regime of the Institutional Revolutionary Party.

In addition to advocating the expansion of Nafta, Mr. Fox, a former Coca-Cola executive, also promoted a more even distribution of wealth. He promised to create more than a million new jobs a year, increase government spending on education and health care and make low-interest loans available to small and medium-sized businesses.

In his state of the union address on Sunday, Mr. Fox highlighted how his sound fiscal policies had helped keep the country afloat, while Mexico's neighbors to the south had become mired in crises that have crushed their middle classes. The Mexican peso is strong, inflation is projected to decline to 4 percent annually and levels of foreign investment have remained stable. A government welfare program started by Mr. Fox's predecessor, Ernesto Zedillo, has been renamed and expanded to include more than two million new families.

"We have achieved change without violence, without crisis, with great economic stability," Mr. Fox said in a conversation with foreign correspondents last week. "That is very important."

Still, the benefits of the nation's current economic stability have yet to ripple through a Mexican society that increasingly measures itself by North American standards. More than a million jobs have been lost since Mr. Fox was inaugurated, many of them in manufacturing. Congress has blocked or watered down Mr. Fox's tax and energy plans, aimed at increasing government funds for social programs and at increasing the supply of electricity to keep up with soaring demand.

Several new plans for stimulating economic growth in 250 of the poorest regions of Mexico, including infrastructure projects and micro-loans that help peasants start homespun businesses, have just come off the government's drawing board. A survey in Mexico City found that only 30 percent of small and medium-sized businesses used banks for financing because of high interest rates and stringent terms.

The financial roller-coaster ride of Salvador Jimenez, a college-educated accountant, is typical. Mr. Jimenez decided to go into business for himself nine years ago, and then nearly lost his shoe store at the end of 1994 when the peso was devalued by 50 percent and the principal of his business loan doubled.

With contributions from his family, Mr. Jimenez, 39, has managed to pay off his debt. His store is back in the black, but earns profits of only about $800 a month. To make ends meet, the single father of 13-year-old twin boys does accounting work for all his neighbors. And his former wife, a lawyer in Chicago, regularly sends money.

"The middle class is falling, falling, falling," he said. "We need help. We need credit."

A government demographer, Rodolfo Tuiran, referred to the 1980's and 1990's as "lost decades," and said the Mexican middle class responded to the cycles of crisis by sending women and children to work and by incorporating members of their extended families into their households.

An increasing number of middle-class men and women have joined the exodus of Mexican immigrants to the United States, Mr. Tuiran said, with one out of 17 professionals abandoning the country in the last two decades.

"That is a significant loss of human capital," he said. "It is an expression of the growing gap between the expectations people have for access to higher education and careers, and the realities of our country, which is not opening sufficient opportunities." (The New York Times September 4, 2002)

EUROLAND -- News from the euro zone economies gets worse and worse. That will come as no surprise to readers of The Business, consistently gloomy this year on euroland prospects. Others have been less cautious.

Until now, the French economy has performed relatively well, but latest figures show that it may go the way of Germany, which observers should increasingly see as Europe's economic basket-case. Industrial confidence in Germany, Italy, the Netherlands and Belgium fell in June and July. A much worse than expected set of figures in France means that its prospects now appear as bad as those of the other euro zone economies.

French unemployment rose to 9% on the International Labour Organisation measure in June, its highest since October 2000. Unemployment went up by 18,000, after a23,000 increase in May, according to statistical agency Insee. Women and younger workers are hardest hit by job losses, as always in France, where welfare state and labour regulations rig the jobs market in favour of middle-aged males.

The unemployment rate for women reached 10.1%, compared with 8% for men, while 21.1% of under-25s are unemployed - a shameful figure. Francois Fillon, the employment minister, said he could not foresee any reversal in the trend. He believes unemployment will get worse in the autumn.

French consumer confidence also declined in July, reflecting increasing fears about job prospects, according to Insee. The index performed far worse than the markets were expecting and amount to a return to the low level of confidence last seen in April.

Consumers were particularly pessimistic about living standards and reported a deterioration in personal finances, despite the new centre-right government's plans to cut income tax by 5%.

The figures also suggest that the French may start to curtail spending on industrial goods, one of the key driving forces of the economy until now. Manufacturing is also set to deteriorate as capacity utilisation in factories dropped to 84% in July, while output prices increased by only 0.1%.

The survey shows that manufacturers expect demand to drop in the next few months, compared with a relatively strong performance in the second quarter. Increased pessimism by manufacturers is mainly due to concerns about domestic demand, but also because of the stronger euro. French manufacturers seem to have benefited from a temporary bout of restocking, which could now be over.

Such a strong reversal in business confidence at this stage of the recovery has not been observed since 1992, according to French bank Societe Generale, when most euro zone economies entered the doldrums.

Poor business confidence in May and June could have been put down to the strong performance of Jean-Marie Le Pen's National Front in the first round of the presidential election; but the continued decline in July shows the problem is more deep-seated.

A key danger for all euro zone exporters is that their prospects depend crucially on global demand. America increased its imports by 23.5% at an annualised rate during the second quarter, its fastest increase since the first quarter of 1984. The US trade deficit with the euro zone has risen from $ 53.2bnin 2000 to $ 60.2bn today, and hit new records in the three months to May. As the US economy stalls and the dollar weakens that will not continue.

US consumers are unlikely to continue snapping up imports at such a rate in the forthcoming months: the decline in the dollar against the euro since early this year is putting upwards pressure on the price of imports to the US.

Germany's economy is faring even worse than that of France, as it has done for some time. Even though German households are less exposed to the stock markets than their US and UK counterparts, the drop in share prices is hitting consumer confidence and retail sales.

The Dax index of German shares fell by 10% in July, following an 18% slump in the three months to June. Partly as a result, total retail sales in Germany dropped by 1.7% month on month in June, following a 0.9% decline in May, according to the Bundesbank.

The real retail sales index in June reached its lowest since April 1999. Retail sales were even worse if car and petrol sales are stripped out, falling by 2.2% month-on-month in June. German consumers have also been put off by price rises following the euro's introduction at the start of the year.

Lombard Street Research's monthly index of leading indicators, which measures the expected performance of the German economy, has hit its lowest level since January 1988, before reunification. Industrial production is down by 4.5% in the12 months to June and construction orders fell 9% in June. Even though the problems are deep-rooted, the Schroeder years have done little to tackle them.

The only good news has been inflation, which remains below the European Central Bank's 2% ceiling. According to Eurostat, the EU's official statistics agency, inflation rose from 1.8% in June to 1.9% in July, when measured on the Harmonised Index of Consumer Prices.

Relatively low inflation could make the ECB feel able to loosen monetary policy before the year-end. But the euro zone's low inflation is the stability of the corpse. (The Business
August 4, 2002)

Following are global and regional estimates of the state of the AIDS epidemic at the end of 2001, released Tuesday by the Joint UN Programme on HIV/AIDS (UNAIDS) ahead of the 14th International AIDS Conference opening Sunday in Barcelona, Spain.


Global total: 40 million

Of which: Adults 37.1 million (women: 18.5 million)

Children under 15 years: three million

Regional totals (adults and children)

Sub-Saharan Africa 28.5 million

North Africa and Middle East 500,000

Latin America 1.5 million

Caribbean 420,000

North America 950,000

Western Europe 550,000

Eastern Europe and Central Asia 1.0 million

East Asia and Pacific 1.0 million

South and Southeast Asia 5.6 million

Australia and New Zealand 15,000


Global total: five million

Of which: 4.2 million adults (women: two million)

Children under 15 years: 800,000

Regional totals (adults and children)

Sub-Saharan Africa 3.5 million

North Africa and Middle East 80,000

Latin America and Caribbean 200,000

Asia and Pacific 1.0 million

Eastern Europe and Central Asia 250,000

High-income countries 75,000 (including US, Western Europe, Australia and New Zealand)

- AIDS DEATHS in 2001

Global total: three million

Of which: 2.4 million adults (1.1 million women)

Children under 15 years: 580,000

Regional totals (adults and children)

Sub-Saharan Africa 2.2 million

North Africa and Middle East 30,000

Latin America 60,000

Caribbean 40,000

North America 20,000 (including fewer than 500 in Canada)

Western Europe 8,000

Eastern Europe and Central Asia 23,000

East Asia and Pacific 35,000

South and South east Asia 400,000

Australia and New Zealand, fewer than 100


Global total: 14 million

(Agence France Presse July 2, 2002)

CUBA -- The President of the Cuban parliament Ricardo Alarcon today attacked the world's electoral processes which usurp power from the people by seeking to comply only with apparent democratic standards.

Speaking during a ceremony to inaugurate the National Candidacy Commission (CNN) Alarcon said that the essence of Cuba's electoral process is not derived from the amounts of money used or from appearances but rather from the effective participation of the people.

To the Cuban legislative leader, the manner in which the electoral process is conducted in his country would make headlines if some day another nation were to discover that massive popular participation is possible in this world. Nowhere else can the humble working people directly choose who will represent them in the country's 169 Municipal Assemblies, he stressed, saying that these will decide which candidates will be part of the next general elections to be part of the Provincial and National Assemblies of the People's Power. We, he argued, must work so that this electoral process (to take place on 20 and 27 October at the grass roots level, without schedule for the general election) is the cleanest and most transparent ever held on the island; so "that Cuba", he continued, "continues to represent the aspirations of the people".

"In this country", he stressed, "what is an aspiration for hundreds of millions of people the world over will continue to be a reality, which is to achieve a government of the people, by the people and for the people".

He said that the CNN, unveiled this Tuesday 3 September in the capital, simultaneously with its establishment in the 14 provinces and 169 municipalities of the country, is made up of social organizations headed by the Cuban Workers Federation, which is the true essence of civil society.

The participation of workers and other sectors of the population (young people, women, peasants) in power is an essential part of what "academic textbooks define as civil society but a fully-developed civil society which is emancipated, which makes decisions and makes a difference in leading society," he said.

He recalled that the publication of electoral records (in July 2002) is an unprecedented development in the world, an action which prevents the occurrence of electoral fraud. "In Cuba, to be on this register," he explained, "it is not necessary to pay anything or to fill out cumbersome paperwork to be or not to be accepted by electoral authorities, as in the so-called democratic countries".

The president of the CNN, Roberto Diaz Sotolongo said that nomination of candidates for the municipal elections, which will begin tomorrow and continue until 30 September, is one of the things which makes the democratic and participative nature of the Cuban political system different. The people will elect approximately 14,935 municipal councillors in October, 245 more than in the past elections (in 2000.)

The 12 members of the CNN read an oath pledging loyalty to the fatherland, the revolution (1959) and the country's political, economic and social system and declared that the local parliament was irrevocable and enjoyed the support of more than nine million electors. (Supplied by BBC Worldwide Monitoring September 5, 2002)

Peruvian President Alejandro Toledo Friday termed his newly sworn-in cabinet as the first step to give new strength to his government.

Toledo said that the move was meant to re-launch his government which seeks to reconstruct democracy without giving up responsible management of the economy and close collaboration with the people. Toledo announced a cabinet reshuffle on Friday, naming Luis Solari as head of the Council of Ministers and ambassador to the United States Allan Wagner as foreign minister. Economist Javier Silva would take over the Economy and Finance Ministry.

The partial reshuffle of Toledo's cabinet started Monday night with the "irrevocable" and sudden resignation of Foreign Minister Diego Garcia-Sayan. A number of ministers followed suit, including Minister of Economy and Finance Pedro Kuczynski, Women's Affairs and Human Development Minister Cecilia Blondet, President of the Council of Ministers Roberto Danino, and Ministers of Education and Justice Nicolas Lynch and Fernando Olivera.

The political turbulence in Peru was triggered by the government's endeavor to privatize two power companies in southern Arequipa province.

Two people were killed and more than 100 others were injured last month in massive protests against the privatization drive. (XINHUA NEWS AGENCY. July 13, 2002)

The author is a professor at the School of Labor and Industrial Relations of the University of the Philippines. The following are excerpts from the keynote paper delivered by Dr. Ofreneo last month in a seminar on the "Impact of China's WTO Accession on the Labour Market" in Beijing. The seminar was organized by the All-China Federation of Trade Unions, the Friedrich Ebert Stiftung, and the Asia-Pacific Regional Organizations of the International Trade Union.)