Migrant Remittances

Migrant Remittances

By Gustavo Castro Soto

The natural catastrophes that are hitting the world have accelerated poverty not only in the countries of the South but in the countries of the North themselves. These natural catastrophes are also the product of political and economic catastrophes.

Migrants' Remittances: Great Exploitation or the Potential Power of the Global South?

The hurricanes, storms and natural disasters that are hitting the world have accelerated poverty not only in the countries of the South but in the countries of the North themselves. China, India, El Salvador, Mexico, Guatemala, the United States, among many other countries, are experiencing "natural phenomena" never seen before. But these natural catastrophes are also the product of political and economic catastrophes. More than 30 years of a neoliberal production and consumption model that has led us to excess consumption of paper, water, electricity, agrochemicals, etc., has caused so much deforestation and the interruption and alteration of the water cycle. The Kyoto protocol arrived late and the disappearance of the ozone layer and climate change are already causing great damage that accelerates migration from poor countries to richer countries.

The most ironic thing is that migrants, the fruit of the expulsion generated by the economic model of capitalist production and exploitation, are concentrated in countries whose policies have forced them to leave their own homes to be doubly exploited. They lose home, land, family, culture, and last but not least, a large percentage of their paltry earnings when they are sent to their relatives in their places of origin. It seems that generating migrants is also a big lucrative business, it generates more money and more concentration of wealth. Yet could those millions of migrants and their billions of dollars represent a political and economic force if organized?

At the international level, migration has been growing rapidly. In 1965 there were 75 million migrants, a figure that doubled after 30 years of neoliberal policies to reach 150 million in 2001. It is expected that they will reach 168 by 2010; 188 by 2020; 208 by 2030; and 248 million migrants by 2050. The amount of remittances sent globally soared from 97 billion dollars in 1994 to 143 billion dollars in 2002 as neoliberal policies, the implementation of free trade agreements and the privatizations created a gigantic mass of expulsion and migration to the north. It is estimated that by 2006 the amount of remittances could reach more than 177 billion dollars. That is why migrants are big business.

It is estimated that during 2005 family members living and working in northern countries will send around $ 170 billion (mmdd) to the global south (to the poor who are in both the countries of the north and the geographic south). Most of them will use the money transfer services or some financial institution based in the United States that will remove them from 25 to 30 million dollars for transfer charges, which can range between 13 and 20% of remittances. Only since The United States estimates that in 2005, migrants will send around $ 100 billion to their relatives in the south. They will lose between 10 and 20 million dollars for the collections of banks and companies and onerous exchange rates. Mainly this money will stay in one of the five largest financial institutions that offer the remittance service: Western Union, MoneyGram, Citibank, Bank of America and Wells Fargo. Although it would be necessary to delve deeper into each one of them, let us see a brief overview that the organization TIGRA offers us in its analysis [1]:

1) First Data Corporation, based in Greenwood Village, CO., owner of Vigo; from Western Union and Orlandi Valuta (both generate 42% of the profits). It has more than 270 thousand establishments in 195 countries and is the world's largest provider of money transfer services without bank procedures. In 2004, it made profits of 10.7 billion dollars in more than 700 million transactions. Together with MoneyGram it controls between 60-70% of the remittance market. Its strategy leads it to expand to China, India and the Philippines, a country where its operations grew 100% in 2004. It also has agreements with 7-Eleven, Rite-Aid, Kroger, Wal-Mart in Argentina, the French Post Office, Grupo Electra and Azteca Bank of TV Azteca. From 1995 to 2002, Western Union earned $ 461 million in exchange rates from 18 million customers in 114 countries during. The Western Union Foundation delivers .0037% of its profits to some organizations located mostly in Colorado where it is headquartered and not in the communities where it profits. Goldman Sachs and Fidelidad Administrativa y Corporación Investigativa (FMR) are FDC's largest investors, who brought Sudanese oil to the world market, which helped that country finance the genocidal civil war against its people.

2) MoneyGram International. Headquartered in Minneapolis, MN, it provides transfer services through 74 thousand establishments in 160 countries, and with profits that exceeded 400 million dollars in 2004, registering a 35% increase in money transfers from migrants. It recently expanded its services to China. Together with Western Union, it controls between 60 and 70% of the remittance market. In 2002 she was sued by clients before the Court for using low exchange rates during operations. It does not have a Social Support Foundation. The Shapiro Capital Administrative Company owns 5% of the company and Banana Chiquita 9% (a banana company that also supported military dictatorships in Latin America).

3) Wells Fargo Bank. It entered the remittance market in 1997 and has 250,000 bank accounts with consular registration in the United States. It operates 3,076 banking establishments in 23 states of the American Union. It has 16.4 million clients and 420 million dollars in assets. With the mechanism " Instant Money”Allows fifty bank cash transfer. It provides financing to Burlington Resoucers, the Houston oil refining company with interests in the indigenous territory of the Ecuadorian Amazon.

4) Bank of America. The third largest bank in the United States. It operates in 29 states with 5,829 branches and offices in 35 countries. In 2003, it obtained profits of 37.8 billion dollars, almost 10% more than in 2002. Grupo Financiero Santander Serfin, the third largest bank in Mexico, acquired 25% of the shares. They have their mechanism " Safe money”For sending remittances to Mexico. They currently have interests in Venezuelan oil. The largest financier of InterGen, an international electric power generation firm with projects in the Philippines, Colombia, Mexico, Egypt, Brazil and Turkey.

5) CitiGroup. It is the first financial services company to bring banking, insurance and investment services under one roof. It has 200 million clients in more than 100 countries. In 2003, it made a profit of 17.8 billion dollars and its global transaction services increased by 31% in 2003. One of its biggest strategies is the Hispanic market. It acquired Banacci and Banamex, the largest bank in Mexico and manages retirement and pension funds. It is the largest lender for Mexicans. It is the leading distributor of credit cards for low-income people in the United States, a system that takes over 20% of the income of the Latino family to a personal debt service. One of the largest shareholders is the Climx Arimco Mining Company (CAMCA), whose interests clash with indigenous communities in the northern Philippines over gold and copper deposits. In August 2002, the IMF offered Brazil a $ 30 billion loan to finance the payment of its debt in exchange for austerity and privatization programs. Citigroup contributed $ 9.7 billion from this package.

With the exception of the Bank of America and Citigroup, none of those exposed so far have signed the "Equatorial Principles" They seek to define social and environmental standards and that every company that requests loans for more than 50 million dollars must comply with to invest in the countries of the South. These principles are based on the policies and guidelines of the World Bank's International Finance Corporation (IFC), which finances private companies. [2]

In the case of migration to the United States there are interesting facts. According to TIGRA, in the decade of 1901-1910, migration reached 8.8 million migrants who gradually decreased until reaching the period of the Great Depression and World War II, when migration was 0.5 million in the decade 1931-1940. The migration pattern at the end of the war and the recovery of the economy of the United States at the expense of the countries of the South grew gradually until it reached 9.1 million in the decade of 1991-2000. In the past decade, immigrants accounted for 42% of the total increase in the US population. A third of all immigrants to the United States arrived in the same decade when structural adjustment programs were among the most severe and when the Free Trade Agreement between the United States, Canada and Mexico (NAFTA) was implemented.

It was also the decade of the great privatizations and therefore of the increase of unemployment; the elimination of farm subsidies and guarantee prices; the elimination of import quotas and tariffs; of the bankruptcy of companies that could not compete with the products highly subsidized by the North American government to its transnationals. So for the year 2000 there were already 30 million immigrants in the United States, the highest number ever recorded. The annual growth rate of immigrants is 6.5 times faster than that of the same North American population. It is then that the United States begins to strengthen its wall on the border to stop the poverty that they themselves caused with their economic and tax policies via the International Monetary Fund (IMF) and the World Bank (WB).

According to data from the World Bank, the average per capita income at the global level in 1976 was 150 dollars the lowest level and 6,200 dollars the highest. After 30 years of neoliberal policies, the lowest average only grew almost twice as much, reaching 420, while at the highest level it was almost five times more, reaching 27,510 dollars per head. For its part, the debt of the global south stood at 100 billion dollars in 1970 and reached 2.7 trillion dollars. These are just some indicators that explain the growing migration during the application of the neoliberal economic model.

Thus, during these 30 years of neoliberalism, among the 10 countries expelling migrants to the United States They are, in order of importance: Mexico (7,119 million that represent 27.1% of the immigrant population); China / Taiwan / Hong Kong (1,387 representing 53%); The Philippines (1,207 representing 4.6%); Vietnam (989 representing 3.8%); El Salvador (723 representing 2.8%); India (722 representing 2.7%); Korea (589 representing 2.2%); Dominican Republic (635, representing 2.4%); Cuba (914 that represent 3.5%) and Guatemala (469 migrants that represent 1.8% of the immigrant population).

In the case of the Philippines, every day 2,275 people leave the country to work abroad in various low-paid jobs. In 2003 the government passed the Dual Citizenship and Voting Abroad laws. And is that 10% of the voters are abroad or send 8 billion dollars a year in remittances. In the case of Mexico, more than 1,100 people migrate to the United States daily and Mexican remittances during 2004 were equivalent to 70.5% of oil sales and 2.4% of Gross Domestic Product (GDP). [3]

According to TIGRA, in 2001, 10 countries that most sent remittance money to the south They were: the United States ($ 28.4 billion); Saudi Arabia (15.1); Germany (8.2); Belgium and Switzerland (8.1 each); France (3.9); Luxembourg (3.1); Israel (3.0); Italy (2.6) and Japan (2.3). On his side and in the same year, the 10 countries that received the most remittances They were: Mexico (13.2 in 2003); India (9.1); Philippines (6.4); Egypt (2.9); Turkey (2.8); Bangladesh (2.1); Jordan (2.0); Dominican Republic (2.0); El Salvador (1.9) and Colombia (1.8). However, it is different from the point of view of dependence on remittances in proportion to Gross Domestic Product (GDP): Haiti (24.2%); Jordan (22.8%); Nicaragua (16.2%); El Salvador (14.0%); Jamaica (13.6%); Dominican Republic (9.3%); Philippines (8.9%); Honduras (8.5%); Ecuador (7.9%); Guatemala (3.1%) and Mexico (2.1%). However, in 36 countries of the 153 developing countries, remittances are larger than the entire flow of public and private capital.

In order to undermine the Cuban revolution, the United States does not charge commissions to Cubans who live in their country and who transfer money to their relatives on the island. Nor does it charge Salvadorans, since it has managed to make that country apply the economic policies of the United States without any problem and, in exchange, the government of El Salvador can receive foreign exchange for the payment of foreign debt and other financial needs. With the other countries, financial institutions extract large sums of money from migrants' remittances through three types of charges to your shipments: 1) charge for the shipment service or transaction; 2) commission on the exchange rate; 3) interest rate on pre-transaction funds (1.5% on average). Furthermore, more than half of the migrants in the United States do not have bank accounts and are forced to use "advantageous banks" [4] that additionally cost them 5-10% of their wages. Many of these outlets are financed by large US banks. Therefore, migrants lose 16 to 28% of the money that they send to their relatives in the south and that remain in financial institutions. For example, according to the Multilateral Investment Fund of the Inter-American Development Bank (IDB), in 2002, migrants from Mexico were charged 5.8% for the transaction and 3.3% on the exchange rate; to Nicaragua 8.8 and 0.5; Guatemala 7.6 and 1.8; Haiti 10.2 and 0.5; Dominican Republic 9.1 and 2.1; Jamaica 9.6 and 2.1; Colombia 9.4 and 3.2% respectively.


According to Tigra, the movement of capital will be increasingly difficult under the financial criteria of the Patriotic Law. But it will not only be so for migrants, but also for Foundations and International Cooperation Agencies that are aligning themselves with these criteria - such as the Solidago Foundation, Oxfam America, Ford Foundation, etc.-. Therefore, in the case of remittances, the competition of financial institutions to suck the resources of migrants will lead them to seek legalization in another way. The G-7 had already indicated in April 2004 that "on remittances, we will continue working on our initiatives to integrate remittance services into the formal financial sector."

Another option is expansion, so Western Union looks for new markets such as China or India and tries to eliminate competition since in the United States the number of banks and credit companies that offer remittance services is increasing. A third option could be for banks to make new alliances with regional or local companies. Some examples: Wells Fargo with the Philippine National Bank; Western Union Acquires Varvas and Paymap; or Western Union's relationship with Elektra and Banco Azteca in Mexico. A final option could be the purchase of banks in the south, such as the one made by CitiGroup when it acquired Banamex, the largest bank in Mexico, and the acquisition of a large part of the shares of Santander Serfín, the third largest bank in the country. For its part, the Federal Reserve of the United States already allows access to the Automated Claringhouse (ACH) system to transfer remittances to banks abroad at a limit of 67 cents per transaction.

The global trend is increasing migration; temporary and unskilled employment; the sending of increasing remittances; the legalization of the trafficking of undocumented persons; the promotion of dual citizenship, votes and representation abroad; integration of immigrant organizations; the export of human labor as an economic policy; agreements with United States banks on remittance or acquisition policies of home country banks.

The poor have become a great source of income for big capital, either as exploited workers or peasants; either because the strategic resources are on their lands; either to extract taxes or retain their money under the pretext of withholding their retirement funds, pensions or pensions; or either as migrants. And since Mexico ranks among the largest expelling migrants to the United States, the global electorate has become an important “sector” in the policies of the countries of origin. Therefore, not only your money but your vote could have a significant force if it were organized. The Mexican government approved in 2005 the vote from abroad for migrants in the United States, just when in 2006 important decisions could be made for the country's economy.

The economic power of remittances is such that it can compete with the budget of many national economies in the world and even large transnationals. To give us an idea, in the agri-food sector in the branch of biotechnology and genomics, 10 largest companies in the world control 54% of the 42 billion dollars in profits that the various biotechnology sectors have, which is equivalent to 42% of what is calculated that in 2005 the migrants will send their relatives to the south. Only what the banks will take from them in commissions is equivalent to the profit of the 10 transnational companies that control 62% of the world market of the veterinary pharmaceutical branch. Otherwise, the 100 billion dollars that will be sent by migrants from the United States this year is equal to the profits of a year of the world's 10 largest seed corporations, plus that of the 10 pesticide giants, plus the 10 largest distribution companies. of food in the world. [5] It should be noted that in 2004 the sales of Wal-Mart, the largest transnational in the world, amounted to 256 billion dollars when this year it is estimated that global migrants will send more than 170 billion dollars to the global south.

Also, ironically, it is not the World Bank that contributes the most to combat poverty in the world. Neither do other multilateral banks like the IDB. Much less Foreign Direct Investment that is erroneously presumed to create more jobs. Those who contribute the most to combat the poverty that neoliberal structural adjustment policies have generated are precisely the migrants expelled by these policies. And to top it all, they use themselves to extract more profits.

The alternatives

TIGRA distinguishes several possibilities among the alternatives, but we consider that they do not go outside the circuit of the international financial institutions (IFIs). Among these alternatives he wields: 1) demanding lower fees for sending remittances; 2) increased access to information and transparency on the remittance service; 3) expand the service to rural areas; 3) forgive the external debt of the poorest countries; 4) increase investment in poor communities in the United States. On the other hand, it proposes the creation of a Coordinated Transnational Organization to carry out a joint investigation into the agreements between financial institutions in the United States and banks or businesses in their countries of origin; about the debts with these banks, especially the shady loans to military (and also political) dictators; and on other investments and financing in the country of origin. It also proposes to create a profile of remittances practices in the country of origin or region and identify a day of action and global mobilization to express demands to financial institutions.

From another point of view, the best alternative is to generate local development models that prevent the population from leaving their places of origin. To the extent that migrants increase, it means that they have left their possessions and lands behind, a space that will be occupied by other actors, such as the case of transnational corporations on the land and what exists in them.

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[1] Most of the information is provided by the Transnational Institute for Community Action and Research (TIGRA), 3781 Broadway, Oakland, CA 94611, USA,
[2] As of July 2004, the 23 largest banks in the world that have signed the Equator Principles are: ABN Amro, Bank of America, Barclays, BBVA, CIBC, Citigroup, Credit Suisse Grp, Calyon, Dexia, Dresdner Bank, Eksport Kredit Fonden, HSBC , HVB Group, KBC, ING, Mediocredito Centrale, Mizuho Corporate Bank, Rabobank, Royal Bank of Canada, Royal Bank of Scotland, Standard Chartered, Unibanco, WestLB, Westpac. See
[3] According to the Secretary of the National Population Council (CONAPO), María Elena Zúñiga.
[ 5] According to the studies of Grupo ETC.

Video: Remittances: The Gateway Product for Migrants Financial Inclusion (May 2021).