By John C. Cross, Ph.D.
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This paper analyses the recent attempt by the government of Mexico City to formalize street vending in that city by relocating street vendors in part of the downtown area known as the "Historical Center" into enclosed market buildings. The forces behind the changes in policy towards street vending are analyzed and the weaknesses of the policies are discussed with reference to the powerful street vendor organizations active in the city.
The market construction program was designed to deal with each of these issues in turn. Besides removing vendors from the street, it was designed to allow them to become subject to the tax codes, health regulations and otherwise pay the full "costs of formality." This paper will look at how this policy was implemented, largely over the objections of street vendors themselves who often complained that their earnings were too low to warrent these additional costs. Furthermore, it will provide an initial qualitative assessment of the success of the program based on a limited set of open ended interviews with officials and vendors in the summer of 1994.
Mexico City has seen a vast growth in street vending over the last two decades. By 1992, about 200,000 vendors sold everything from fresh food and "tacos" to stereos and TV sets in thousands of street markets spread throughout the city. Alternately vilified and supported by officials and politicians who have used them as scapegoats for many urban problems but also as political allies,1 street vending grew markedly as a form of "self-employment" that helped feed many families and provide essential services during the difficult period of the Mexican economic "crisis" of the 1980s. Indeed, as recently as 1990, the Mayor of Mexico City, Ma±uel Camacho Solis, labeled as "bordering on fascism" the efforts by a group of middle-sized store owners to have street vending declared illegal by the Mexican Supreme Court, (La Jornada 1/23/90: 22) and the Administrator of the downtown district (the Delegaci¾n Cuauhtemoc), where the largest concentration of street vendors in the world--some 25,000--ply their trade, eloquently criticized those who, "with a baroque vision, feel that the Historical Center should be a reflection of the greatness of our ancestors, but not a mirror of the social reality in which we live," and praised street vending as a "reliever of social tension, an alternative employment that closes the door to poverty and opens the possibility of new economic perspectives that come to better the quality of life."2
But yet within a year of these statements, these same officials unveiled a program designed to eliminate street vending from the map of Mexico City, or at least to begin to do so, in an ambitious program of market building construction that would herald the formalization of the economic role of this vast economic sector. This change in the official posture towards street vending closely followed the 1991 mid-term elections in Mexico, in which the PRI made a surprising come-back. After almost losing the presidency and control of congress in 1988, the PRI swept the 1991 elections with only a few charges of electoral fraud. Street vendors, who traditionally had been used as "acarreados" (paid supporters) by important groups within the PRI to "legitimize" elections by a show of "supporters", now perhaps didn't seem to be as necessary to a regime focusing its sights on the "modernization" of Mexico City in anticipation of the North American Free Trade Agreement. Street vendors were "hold overs" of the traditional past, and the Salinas regime wanted to project a different "image".
Although the local Assembly for the Federal District (ARDF) had spent two years writing a new ordinance to regulate street vending, this was shelved after the elections while the city began to plan the removal of ambulatory vendors in the city's Metro rail system as a prelude to removing vendors from the Historical Center and, later, the rest of the city. A series of "negotiations" between officials and street vendor leaders began in which city officials urged the leaders to sign a vaguely worded general statement that promised to "reorder" street vending in the central area. Later it became clear that these terms were taken by the city to mean the relocation of vendors into specially built market buildings.3
The first step was to clear the city's metro system of vendors. A month after the 1991 elections rumors began to be circulated of a crackdown in the metro, and the metro carried out a propaganda blitz identifying the vendors with safety hazards. The actual crackdown came six months later in January, 1992 after a fight between a vendor and a passenger resulted in a fatal shooting. Using the shooting as an excuse, the city clamped down with the use of hundreds of riot police. The metro operation was significant in two regards, despite the fact that it was never 100% successful. First, it showed vendors that the city could use force if necessary, and thus pressured vendor leaders to go along with the city's plans for their removal. Secondly, the shooting provided substantial public support for the city's actions, suggesting that public opinion was moving against street vending and in favor of the city's law and order policies.
But also present in the Historical Center were several associations of small merchants who claimed to represent the many small boutiques that line the more fashionable streets in the area. While a certain level of competition had always existed between these merchants and the street vendors (although to a certain degree their interests were also complementary since the street market attracted huge numbers of clients to the area), the conflict between them intensified after the passage of new fiscal regulations which compelled small merchants to purchase "fiscal cash registers" that the tax authorities hoped would stem the high degree of tax evasion among shopkeepers. Despite the fact that many small shopkeepers simply never used the machines, they still had to purchase them while their "informal" street colleagues avoided both the taxes and the machines. The reaction to this measure was harnessed by some of the small-business associations to increase their own membership roles and buttress their importance in the area by laying the blame squarely on the street vendors.
The most militant of these groups, "ProcÚntrico", was formed by a colorful character named Guillermo Gazal Jafif to push for the elimination of street vending in the city center. Originally ignored by city officials and snubbed by the city's official Chamber of Commerce (Cßmara Nacional de Comercio, or CANACO), this group became highly successful in gaining national attention for their cause and pushing the city to carry through on the "reordering" of street vending.
During this initial period, several street vendor organizations began extending their areas and augmenting their numbers of vendors--to guarantee a larger number of market spaces, or at least a better negotiation position. Others took advantage of the plans by charging their vendors huge fees to "guarantee" their places within the future markets. Officials added to the confusion by claiming that each organization had to create a fund to pay for the down-payment of their project--but vendors were still charged individual down-payments by the city after paying into funds supposedly maintained by the associations for the same purpose.
What made the policy more difficult to implement was that, in keeping with Salinas' neo-liberal policies of eliminating subsidies, vendors had to pay for the full cost of the stalls. Historically, public markets had been built by the city and the stalls rented to vendors at a symbolic cost both to entice vendors into the markets and to keep them loyal to the PRI. Thus, after the construction of 55,000 market stalls between 1955 and 1968, market construction had ground to a halt due to the lack of new funds even as the maintenance costs of the existing markets became an enormous drain on the public treasury. As a result, the Salinas government planned to build "markets in condominium": market buildings in which stalls would be sold outright to individual vendors and an association of "vendor-owners" would own and maintain the building infrastructure. But when a "test market" was constructed in the nearby "La Merced" district in 1991 (The "San Ciprian" market for 1,100 vendors), only 20% of the stalls were initially occupied despite the fact that the street vendor association had signed an agreement to occupy it and that the vendors had already paid the down payments. The failure of the market was acutely embarrassing for the city given its need to convince the Historical Center leaders to follow the same model.5
The slow pace of action finally brought a response from the leader of ProcÚntrico who had for several years been one of the most vocal and militant activists against street vending in the city, leading him into direct conflict not only with the street vendor organizations, but also with city officials and the Chamber of Commerce (CANACO). As early as January of 1989, Gazal attacked city officials for allowing the street vendors in the center to "steal" 10,000 million pesos (U$4.5 million) in sales from the small stores. In January of 1990, after obtaining a supreme court ruling against street vending, he threatened that his members would stage store closings to enforce the ruling, leading the Regent to accuse him of "bordering on fascism". In late August and early September of 1991, Gazal again appeared in the public light, urging that the vendors at least be put into bazaars.
This time the vendors staged a counter-demonstration against Gazal. The crowd of enraged vendors marched up to where he was standing and, after a short shouting match, bright red tomatoes started falling out of the sky besmirching Gazal's cashmere suit. After a few seconds, Gazal and two assistants who were with him began to run, and the crowd ran after them. The following notes were taken while watching a video tape held by the vendors' association:
It shows young people running to the side of and in front of Gazal throwing tomatoes at him and shouting "get lost" and less pleasant things. But even though they could have cut him off easily there is no attempt to do more than throwing tomatoes. No stones are seen. When Gazal gets to the corner of Brazil and ran around it with his assistants, several of the attackers follow him, but are called back by the others. The film shows Gazal and his assistants getting into two sports cars parked on the street and taking off as fast as they can. "Get lost, damned a__hole," a voice is heard. Anti-semitic profanities were also heard frequently on the tape.The vendors seemed to hate Gazal, who they saw as a direct threat to their livelihoods. One lamented that tomatoes had been used against the activist: "They should really have been stones because tomatoes are very expensive. That way the problem would be over," he joked.
But the event was clearly welcomed by Gazal who, in the opinion of many members of the press, had been hoping to provoke such a response. One noted that even several hours afterwards, Gazal was still in his tomato-stained suit waiting for a television crew to interview him. He was first-page news the next day, and was carried by the top evening news program in the country the same evening, sparking massive criticism of the protestors and of street vendors in general, and helping to satanize the Historical Center vendors in the same way that the Metro shooting had stripped the Metro vendors of any public support.
However, in contrast to the unanimous press opposition to the metro vendors when they were attacked, several key newspaper sources supported the street vendors this time, attacking Gazal for being an opportunist who simply wanted to get attention in order to win a power struggle with the CANACO. A political columnist for La Prensa, a popular newspaper that generally attacked street vendor organizations, went so far as to accuse Gazal of committing fraud against investors who were trying to build markets in the city, and the same columnist took delight in noting that even after the above events, Gazal couldn't get an appointment with the Secretary of Governance.
But Gazal was in fact highly successful. Not only was vending on the street involved suspended immediately, with a 24-hour guard of over 60 riot police, but a week after the tomato attacks a shuffling of major posts and responsibilities within the administration was forced on the city by President Salinas. The Secretary of Governance who had ignored Gazal was reassigned to a much less important position. With him, following Mexican administrative tradition, went his entire staff, including those who had begun to take the office beyond its purely oversight role into the planning and implementation of the relocation of street vendors in the Historical Center.
At the same time a new "Coordination" was formed to take over the functions that the Secretariat of Governance had begun to perform in coordinating the market construction with a specific mandate of coordinating the construction of facilities for the relocation of all street vendors in the Historical Center. The Secretariat became a purely administrative office once again, with no direct policy implementation responsibilities.
Gazal was not the only factor influencing this process. Interagency rivalries were also influential--with the "red monday" event providing an excuse for attacking the Secretariat of Governance by a number of different groups that were in danger of having their own power undermined by the growth in the Secretariat. Not least of these were vendors themselves, as well as the PRI. But within the administration the biggest enemy would seem to be the 16 administrative sub-units of the city. Called "Delegations", they were each responsible for administrative and regulatory functions within a specific territory--functions which the secretariat had begun to take over. While the officials I spoke to in the Secretariat of Governance denied that any tensions existed between their office and the delegations, the fact that they were writing a budget that included over 80 new personnel whose sole purpose was to make sure that the delegations were doing their jobs properly indicated that relations between the secretariat and the delegations were far from tension-free.
The formation of a separate agency to coordinate and negotiate the construction of markets, also supports this explanation. By removing the implementation of the street vendor policy from the Secretariat's office the city appeared to be both allowing for centralization as well as keeping the secretariat's office from becoming too powerful. Significantly, the new agency had no direct administrative powers, and had to rely upon the delegations to actually implement policy decisions.
A third factor also appears to be at work. Cutting back on the authority of the Secretariat of Governance also satisfied the concerns of leaders, who were afraid that the secretariat's office would have no limit on its power and mandate if it became directly involved in the affair. One of the immediate results of the creation of the new office was that--while the secretariat was stripped of any direct responsibility for street vending, the new agency was only given a mandate to begin construction of markets for street vendors from the Historical Center, when the secretariat had been discussing the elimination of street vending from the entire city. The result was a far more limited mandate with less powers for carrying it out on the part of the agency entrusted with eliminating street vending.
Backed by presidential authority and spurred by organized groups in civil society, the plan advanced slowly but surely over the following two years. The new agency merged with a previous agency, COABASTO (the Coordinaci¾n de Abasto y Comercio Popular), which took over the planning of the market program and was given full authority to negotiate credit guarantees amounting to hundreds of millions of dollars to secure financial backing for the project. A special credit institution, the Fondo de Desarollo Econ¾mico y Social del Distrito Federal (FONDEDF) was opened as a subsidiary of Nacional Financiero, S.A., a government-owned bank, to manage the financial side of the program, putting up 43 per cent of the 580 million new pesos that the project required. (Approximately 175 million US dollars at 1994 exchange rates) while most of the rest was provided by the Banco Nacional de Comercio Interior, another government-owned financial institution.
Since street vendors generally did not have proof of their income nor were they able or willing to put up other property for security on the debt they were to incur by entering the markets--generally from US$5-10,000 depending upon the size and type of stall, of which 10% was to be paid as a downpayment, with monthly payments stretched over 6--years the city had to function as the guarantor of all the financial credits provided for the market program. Thus, even though the city was operating in a new "neo-liberal" mode very different from the 1960s market program, it still incurred a huge financial risk as a direct result of the pressures noted above (DDF-COABASTO 1994).7
But another important clue is given by the many statements by officials who argued that street vending was incompatible with the modern image that Mexico City was attempting to project in light of the North American Free Trade Agreement with the United States and Canada. While street vending had been largely protected during the period of economic crisis in the 1980s by the argument that it provided economic opportunities for the unemployed, interviews with officials after the 1991 elections showed a pervasive attitude that vendors had become wealthy and could now begin to pay their own way. On the other hand, a belief in the ability of NAFTA to reinvigorate the economy and provide new jobs also provided a rational for eliminating the opportunities that street vending provided.
At the same time, mounting pressure from small-business associations to eliminate the "disloyal competition" of street vending was itself largely caused by the increasing formalization of that sector, causing a greater distance between small businesses and street vendors in terms of the formal costs they faced.
Finally, the 1991 elections seemed to show that the PRI could win elections without resorting to massive electoral fraud, and thus the role of street vendors as "acarreados" became less important to the state as a whole. While many street vendor organizations still maintained strong connections to the PRI and were still politically important, as will be argued below, this provided an "opening" for city officials to take action against street vending.
But the limitations of the political system were still apparent in the relocation process itself. Most importantly, it was apparent in the ability of street vendor organizations to strengthen themselves even as they acquiesced to the relocation program itself.
On the surface, the project appeared to be a complete success. The Christmas Season of 1993-94 was the first season in recent memory in which the number of vendors in the Historical Center did not double, and by the summer of 1994 the streets of the area seemed curiously empty. Traffic and pedestrians moved unencumbered by the thousands of vendors who had crowded the streets and sidewalks. While newspaper stalls had not been affected by the "Banco",8 and a special class of candy stalls seemed to be also inexplicably immune to the ruling, the number of vendor stalls had dropped to one or two per block as opposed to the hundreds that had existed previously.
Furthermore, the city was implementing plans to begin to fully "formalize" the vendors by making them fully subject to the tax code as small businesses. Those who only a year before had been informal street vendors were now located in new market buildings, had been counted by the commercial census, held mortgages, and were to begin paying taxes.
But underneath this surface many cracks had already appeared. While a few of the markets that were exceptionally well placed (usually those right next to Metro facilities) were doing good business, many of the markets were barely surviving. Vendors opened their stalls, but reported low sales that did not cover their monthly payments. And in a brief survey of markets on a weekend, when sales are traditionally high, at least half the stalls appeared to be permanently closed. The worst area was La MercÚd, a market area where over 3,000 stalls had been built in the 1950s and where an equal number had been constructed to accommodate a new generation of street vendors in 1993. While the old market buildings were doing the same level of business as before, the new markets were almost entirely empty. One market built for 1,500 vendors had only 25% of its stalls open on even the busiest days, mostly on the side of the building closest to the old market. Despite the fact that the stalls had only just gone into repayment, over 50 of the stalls had already been repossessed by the FONDEDF due to lack of payment on their mortgages as their owners gave up on them and forfeited their downpayments.
Where were the rest of the vendors? Given the apparent increase in the number of vendors in other areas of the city, many appeared to have simply left the area. Others had become "toreros" in the Historical Center, selling small quantities of goods at street corners where they could quickly gather their small amount of merchandise and run in any direction if the market patrol appeared. These tactics were also carried out by many of the vendors who opened their market stalls as well, as a way of making enough money to pay off their mortgages.9 One young man caring for a child at the market mentioned above said he never sold more than three pairs of sandals a day, but his wife, the real owner of the stall, sold illegally in the nearby streets to pay the mortgage and their living expenses. An elderly man who spoke eloquently about his attempts to convince his fellow vendors to give their market (in another area) a chance to build up a clientele actually earned most of his money a block away from the market on a pedestrian bridge. An Indian woman with a fruit stall in a small but empty market near La Marched noted that she had to sell her fruits from door to door and on the street to keep her merchandise from rotting in the market.
Even in San Ciprian, which by 1994 had been open for four years, most stalls were still unoccupied, and those vendors who did spend long hours waiting for the occasional customer to drift through complained about the difficulty of making their mortgage payments while at the same time restocking their merchandise, remodeling their stalls to attract more clients and eking out enough to eat from the low turnover they experienced. Again, many had to take second jobs, or close their stalls while they paid it off and saved enough money to remodel and stock up. That vendors were willing to do so showed that they thought of the stalls as investments that would hopefully pay off over the long term, and their willingness to work double shifts (or triple shifts in the case of many of the vendors who were women) and to forgo present income is a credit to their entrepreneurial spirit. But the vast numbers of empty stalls, stalls under repossession and stalls that were being sold illustrate that many of the vendors simply could not pay these high prices, and would be forced to look for employment elsewhere, or back to the street.
The resale of stalls in itself posed a difficult problem. While the stalls were in repayment, resale or even lease of the stall was ruled out by the mortgage contract. But the number of signs posted by the FONDEDF to remind vendors that this practice was illegal seemed to suggest that it was fairly common. Nevertheless, once a stall was paid off, there was no limitation on its disposition. Unlike the public markets constructed previously, in which the stalls were technically inalienable from their original beneficiaries (but in which corruption usually made their resale and lease fairly straightforward), in the new markets someone with sufficient capital could quite legally buy up all the stalls in any given market, using various forms of pressure to push the original small vendors out of the way.10
During this period the associations of street vendors had been far from defeated. On the contrary, the acknowledged policy of the city was to work in conjunction with the street vendor leaders as much as possible. As in the earlier period, most of the markets were designed for specific associations of vendors, and the leaders were given a number of significant powers in the process. First, city officials negotiated directly with the 60 leaders in the Historical Center as a group and as individuals in designing and setting the rules for the markets. But more importantly, only vendors who were accredited members of an association were allowed to purchase space in the market program. Thus, since leaders defined membership, leaders were made the "gatekeepers" of the market program, with the power to control access to market stalls and to distribute the best stalls to their friends or those who paid the most for them. Thirdly, it gave the leaders control over the markets themselves which opened up the possibility of cacique-type abuse of their powers in detriment of the small vendors who were supposed to be the beneficiaries of the program. Finally, it meant that leaders, far from being weakened by the market construction program that was supposed to destroy the associations as it made individuals into property owners, were made more powerful as they gained control of the markets and continued to have the capacity to threaten to lead a reinvasion of the streets if they deemed it convenient. As one official noted, "One of the biggest problems was that of giving the distribution of stalls to the leaders."
Given the fear among officials that the associations would be able to successfully stall or fight the market program by simply refusing to leave the streets, the policy to leave substantial power in the hands of the associations was a rational one. But it meant that the associations maintained strict control of the markets in most cases, with the leaders becoming in many cases the administrators of the markets themselves. Each market was legally required to form an executive committee to take care of the maintenance and communal problems of each market, but given their control over the vendors, the committees were in almost every case controlled by the associations that the markets were built for, and the leaders continued to charge the same fees they had charged on the streets. Some associations extended their control further by using their own reserves (built up by vendors' fees over decades) to lend money to vendors for the downpayment, thus getting control over them as individuals. At the same time, while officials recognized that the leaders "continue to benefit because they are left in control of the executive committee", official policy is that only the vendors themselves can change this situation, since intervention by the city into the internal affairs of the markets or associations would be seen as authoritarian and undemocratic, (despite the fact that the city itself gave control of the markets to the associations and thus created the authoritarian nature of the associations).
But by not attacking the associations, the greatest fears of the administration could still be realized because, although the leaders had signed the agreement in the Historical Center, they constantly threatened that if the new markets did not work to their satisfaction, they would reinvade the streets in the area. Indeed, the pressure to do so built up to a crescendo during the weeks before the August 1994 Presidential elections. One of the most important leaders in the area, herself a candidate to the ARDF on the part of the PRI, savagely attacked the city for not living up to its end of the agreement and argued that this them gave her association a legitimate right to go back on the agreement. Claiming that she was forced to sign the agreement, she accused the city of building the markets in cheap rather than commercial areas, of allowing intensified vending around the Historical Center, and of creating a new class of "toreros" who were responsible only to the market inspectors: "They can't sell in the markets so they are 'toreando', and the (market inspectors) are the leaders now," collecting daily bribes to allow them to sell.
A leader of a small association noted that, while he was loyal to the PRI, "People are thinking ... if after the elections they don't offer us a solution for the markets they are going to go back to the streets--whatever opportunity they see they'll take." But they had to wait for a large association to take the first step: "If I had the number of people (the large associations) have I would do it. If I did it now they would squash me with one hand. But I don't know--sometimes its worth it to take a risk," he added. Furthermore, as this leader pointed out, the competitiveness among leaders meant that as soon as one association started to reinvade the streets, the others would be compelled to follow to prevent other groups of vendors from taking over the streets that over the years they have considered as "theirs".
Still, despite their complaints about the market program, none of the associations that were affiliated with the PRI left the party to join the opposition in the 1994 elections. Instead, there continued to be a belief that the PRI still provided the best opportunity for implementing reforms in the market program that would lower the costs for vendors. As one vendor noted, after providing a litany of complaints about his market from its poor location (3 blocks from their original area), poor design and unfulfilled promises from officials, "We went to other parties asking for support, but only the PRI offered to help us."11 Still, individual vendors did seem initially to be more independent in their political behavior. Few of the new markets put up campaign flyers as had occurred regularly when the vendors were in the streets, and campaign literature for opposition parties could even be seen occasionally. But rather than spelling the end to organizational politics, many leaders felt that once the elections were over, they could reassert their role either through pushing for more services for the markets or leading a reinvasion of the streets. Unfortunately, it is still too early to see whether the market program will have any substantial effect on the political organization of street vending, but the small geographical area of the market program suggests that any effect would be limited.
Furthermore, individual vendors had already begun to leave the markets and the formalization they entailed, escaping back into the relative safety of the informal street trade setting. Unfortunately it is impossible now to know the characteristics of the types of vendors who chose to stay in the markets as opposed to those who opted out.