The WHY of Fideicomisos - Part 2
By: Cheryl MIller, Broker, Baja Realty and investment
The last article on this subject discussed the “What” of Fideicomisos. A Trust allowing foreigners to invest in residential property in the Restricted Zones of Mexico. Part 2 now deals with the “Why?”.
As discussed in our last article, the history of “Trusts” in general in Mexico dates back to the early 1900s, with foreign property “ownership” in the Restricted Areas being addressed in a Constitutional Amendment in 1971. The Constitution was further amended in 1993 allowing for a longer duration of trusts, ease of renewal and an expanded scope of ownership.
But why have Mexicans been reluctant to allow full foreign ownership in Mexico?
The answer to this question is based in Mexico’s arduous and long history of conquest, invasions and territorial losses. Regardless ,if you were schooled in the U.S. in the 50’s, 60’s and 70s, as I was, presented with the American version of some of these iconic stories, essentially making the raiders of Mexican lands, heroes, the fact remains, that many foreign countries have been involved in these invasions, pillages and conquest of Mexico, some with stunning success. This historic fact has created a cultural protectionism that has been embraced by the various versions of the constitution, the first during the constitution of independence and the second after the time of the revolution and their subsequent amendments. The cultural mindset based in history, is not easy to change or overcome. Which is why recent attempts to eliminate fideicomisos in the Restricted Zone have not been successful.
The history of Mexico is long, covering millenniums, and I am hardly able to render an extremely detailed account without literally writing a very thick book, but a summary of its content is below.
Mexico prior to the 1500’s was comprised of a series of tribal units that were regional until the conquests of some of the more aggressive tribes, such as the Aztecs, whereupon vast areas of what is now Mexico were controlled by those societies. Or until the success of the agriculturally based societies such as the Maya, whose “borders” expanded as well. We, as foreigners know about these societies, their names are familiar. However, there were literally hundreds of tribal societies in the regions that were later to become known as Mexico. Some whose names we should know for their contributions and achievements, but most foreigners do not. The unification of these societies, either by indigenous conquest or assimilation led to some extremely sophisticated societies and some amazing scientific achievements, including a calendar that was even more accurate than the Gregorian calendar in Europe of the same period or architectural and construction achievements that baffle the mind.
In 1519, Hernan Cortez of Spain entered Mexico and changed the face of the continent and Mexico forever. Toppling the Aztecs in a relatively short period of time, conquering Montezuma and the Aztec Empire in 1520, and every other tribal unit in Mexico, so that by 1600 Spanish cathedrals and Spanish control was literally found in every part of what is now known as Mexico today. Hernan Cortez was followed by a series of conquistadors, clergy and Spanish governors in various parts of Mexico and the American continents. The Spanish goal was simple. Gold, wealth for the crown and the conquistadors, and conversion to Christianity. But the bloody history of Spanish, the relegation of the natives to sub-human status, and the cast system that followed for centuries in Mexico left the majority of the population in a state of servitude and poverty.
Full blooded Spaniards could hold land and power. Children of mixed blood: Spanish and Indigenous- Mestizo, were limited to midlevel positions in society and the clergy, and the indigenous people were stripped of basically all rights and ability to prosper.
Of course, this led to the War for Independence in 1810 to 1821, which was led mainly by the mestizo class and Father Miguel Hidalgo under the first real Constitution of Mexico in 1824. The basic result of this independence was that the land holds held by the Spanish upper class was stripped from them, and the lands and property of Mexico was held by the “Mexican people” controlled by the upper and governing classes emerging from the Independence of Mexico from Spain.
The economic and societal systems after the Revolution were faced with many challenges. They took loans from European nations and were unable to repay them. As a last ditch effort by the ruling class to legitimize their system, and after defaulting on several foreign loans to European nations with the help of the Mexican ruling class known as Monarchists, installed Ferdinand Maximilian Joseph of Austria in Mexico as Emperor Maximilio I in 1863. Due to the defaulted loans, this move put France, Spain, England, Austria and the Mexican Aristocracy basically in control of Mexico, which to the people of Mexico, was not much different than the Spanish rule. This lasted less only 3 years, and resulted in uprisings and the first true republican victories in Mexico. Maximillian, was a hapless pawn, and he was executed on 1867 after his abdication in 1866.
Between 1866 and the Revolution of 1910 land ownership was reserved for the Mexican Ruling Class. For the lower classes, the independence from Spain changed little in their day to day lives. They were still not allowed to hold land, position or title. This, plus other social factors, led to the Revolution, where the workers, farmers, and lower classes literally rose up against a system that excluded them in every way. The revolution lasted from 1910 to 1920. Politically, the promulgation of the Mexican Constitution of 1917 is seen by many scholars
as the end point of the armed conflict. After the success of the Revolution, the Ejido and Agrarian laws were developed protecting the farmers, as well as, private ownership of other lands became possible for private citizens.
During the entire history of Mexico, exterior forces against the country were also in play. Below is brief list of the attempts, invasions, conquests and land losses Mexico suffered at the hands of foreign countries:
1519 Hernan Cortez and the Spanish Conquest
1650 Irish Revolution against Spain in Mexico
1818 Argentina invades California, Santa Barbara, Los Angeles, Isla de Cedros, Baja
1819. US Filibusters were defeated, they were against Mexican Independence from Spain
1821 Thomas Cochran invades San Blass, Acapulco, Todos Santos, San Jose, representing as a mercenary for Brazil,
England, Chili and Greece.
1821-1829 Reattempt by Spain to reconquer Mexico
1821-1870 Comanche Indian Rebellions (from US)
1821-1915 Apache Indian Wars
1821-1829 Yaqui Indian Rebellions
1835-1836 Texas Revolution
1838-39 Franco Mexican War- Including France, Austria, Belgium, Egypt, Poland and France)
1845 Loss of Texas to the US (American Settler’s in Mexico who called for support from the US- “Alamo”, Remember the
1846 Mexican American War
1847 Treaty of Cahuenga – Mexico loses California, Nevada, Utah, Arizona, Colorado, New Mexico and part of Wyoming
1855 – Mercenaries from US under Tennessee Congressman Walker, tries to take portions of Mexico and Latin America
1859-1861 Militias from Texas invade Mexico searching for Cortina (Cortina Wars)
1862 Invasion by the French Army
1861-1867 Second Franco Mexican Wars
1864 – 1866 French supported Archduke Ferdinand Maximilian Joseph of Austria installed as Emperor
1910-1919 US Border Wars
1914 Tampico Affair – US Navy occupied Veracruz for 6 months
1915- 1916 Plan de San Diego and Punitive Expedition, U.S. Army into Mexico, retribution against the Plan and Pancho
Villa, many raids into Mexico killing innocent civilians.
1958-59 Mexican Guatemala Conflicts
There are MORE incidents, but this should suffice to illustrate the reason for Mexican nationalism and their reticence to allow full foreign ownership in the Restricted Zone. This operose and tragic history is WHY fideicomisos are still part of the culture of Mexico and is unlikely to be reversed in the near future. When you say “Remember the Alamo”, this phrase has a completely different meaning to a Mexican citizen!
For more information Contact Cheryl T. Miller, Broker of Baja Realty and Investment, 624-122-2690 or email@example.com