A bankrupt Acapulco can't meet its payroll

"Tenemos la bahía más bella del mundo, pero sí, estamos quebrado
We have the most beautiful bay in the world, but yes, we're broke" - Mayor Luis Walton

Guadalajara -
Pity Luis Walton, the mayor of Acapulco in Mexico's southwestern Guerrero state.

After six young Spanish tourists were brutally gang raped in their beach house early on the morning of Feb. 4, Walton shed tears as he pleaded for assistance from president Enrique Peña Nieto. He acknowledged that the "image of Acapulco" was on the line.
Spanish tourists raped, robbed on Acapulco beach front
Acapulco's tearful mayor begs Enrique Peña Nieto for federal help.

But the world showed mayor Walton no mercy. The international press called Acapulco "a death zone," causing huge cancellations by spring breakers. Spain's Foreign Ministry repeatedly warned its citizen to stay out of Guerrero - and many other parts of Mexico - as narco violence raged on unabated in the region. Gunmen ambush police patrol in war torn Guerrero state, leaving nine officers dead.

American analysts did the same. A U.S. security firm urged tourist caution in Acapulco. And indeed, at times it seemed like open season on foreigners in the city:
Murder of Belgian in Acapulco tourist district further damages already tarnished image
Canadian tourists, 60 and 65, injured in Acapulco assault.

Then matters went from bad to worse. A powerful Guerrero school teachers' union urged its members to abandon their classrooms and hit the streets. Their complaint? Federal educational reforms passed by Mexico's congress in December, which will modernize the entire system and greatly enhance the quality and preparedness of teachers. Teachers in three states again form picket lines.

The teachers don't like the fact that they'll be subjected to periodic competency evaluations by autonomous agencies. They'd prefer to do it the old way, where teaching certificates and licenses are sometimes bought and sold like tacos in the city market. In recent weeks they've tried to bully the multi-party Guerrero legislature into passing state laws which would completely override the federal ones - a legal impossibility, of course. When legislators wouldn't play ball, union leaders attacked their building in Chilpancingo, the state capital, leaving thousands of dollars of physical damage and a lot of scared government workers in their wake. They also shut down for hours the famous Autopista del Sol, the main highway from the capital to Acapulco, 55 miles south. Guerrero erupts as angry teachers besiege state capitol.

Tuesday afternoon the legislature finally voted on the teachers' package of demands, rejecting three and passing two, both of which were minor cosmetic changes to state education laws. The next day 4,000 union supporters went on a rampage, attacking and destroying the local headquarters of every major Mexican political party. You can say this much: at least they're a nonpartisan bunch. Guerrero on verge of civil meltdown, as teachers riot.

The Guerrero legislature, by the way, had to transfer its Tuesday's session to Acapulco. That's because there is no longer legitimate law enforcement in Chilpancingo. The entire city is controlled by autodefensas - citizen militias - who claim they're in charge. During the teachers' three hour riot Wednesday afternoon, not a single local, state or federal police officer tried to intervene, or even showed up for the street party. Mexico's troublesome policías comunitarias will prompt some to argue Failed State theories.

Today president Peña Nieto happens to be in Acapulco, for the opening session of a national banking convention. He promised Guerrero governor Ángel Aguirre and mayor Walton that Mexico's federal government is with them. That should help former U.S. treasury secretary Timothy Geithner, who is also in town for the convention, to sleep more soundly tonight in his Diamond Zone hotel room.

Meanwhile Acapulco is broke, quite literally. It can't even meet its next municipal payroll. That's what Walton told Carlos Puig this week. Puig, a wonderful journalist for the respected Milenio network, pens a regular column entitled Duda Razonable - Reasonable Doubt. You can read about his chat with mayor Walton here: La quiebra de Acapulco.

The city owes nearly 2.1 billion pesos in long term debt. Save yourself the math. That's about $175 million dollars. Walton told Puig that he's spoken with Peña Nieto and the secretary of the Hacienda, the nation's tax collection and budget planning agency, but so far there's not even a hint of a plan to repay the staggering sum.

The local chamber of commerce is also desperate. In 2012 more than a 1,000 businesses closed.

Acapulco still has real police. But that's not necessarily anything to be thankful for. More than 500 failed confidence checks, designed to weed out corrupt cops working for drug cartels or organized crime (Confidence checks for local police forces still far behind schedule in 60% of Mexican states). Why then weren't they fired? Because the city doesn't have the cash to do so. Police officers - even ones dismissed for cause - have the right to collect severance pay and other prestaciones de la ley (benefits) when they're dismissed. So Acapulco must allow them to put on the uniform and sidearm.

Forty percent of Mexico's gross domestic tourism product used to come from Acapulco, Puig noted. Now that industry sector is bankrupt.

There are still some magnificent views there, of course. If you just ignore the soldiers on the beaches.

Apr. 27 - In a particularly violent day, gunmen attacked eight people in an Acapulco suburb Friday, killing six and wounding two. Disputes among rival cartels and gangs is the probable explanation.

Jan. 22 - Puerto Vallarta: tensions linger after brazen narco attack
May 2, 2012 - Cancún, no longer an oasis for most

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