Gavin Urges Mexico to Add Foreign Investment

John Gavin, former U.S. ambassador to Mexico, warned Tuesday that conditions in Mexico are “very serious” and advised Mexican officials to embrace long-term solutions, including opening the country to more foreign investment.

Citing Mexico’s enormous foreign debt of nearly $100 billion, Gavin said that as it is presently structured, he does not believe that the money can ever be paid back. Current arrangements to deal with the problem are “at best, short-term solutions,” he said.

“I respectfully submit that Mexico and its leaders have to look at long-term solutions for their problems,” Gavin said.

Answers in Spanish

Gavin, who joined Atlantic Richfield Co. last month as a vice president after five years as a sometimes controversial ambassador, met the media in the oil company’s headquarters in downtown Los Angeles. He said he was responding to requests for interviews since announcing his resignation as ambassador April 7.

Answering questions first in English and then in Spanish, the former film actor also said that:

--He expects an apology when former Mexican President Jose Lopez Portillo learns that Sen. Jesse Helms (R-N.C.), not Gavin, intimated that corruption had made Lopez Portillo wealthy. The former president charged in an open letter to Mexico City newspapers that Gavin had impugned his honor in Senate testimony in Washington. He called Gavin a liar and threatened to sue.

--He is not in favor of “bashing” Mexico over its current problems, particularly drug trafficking, corruption and electoral fraud. However, he added that he is not in favor of U.S.-bashing by elements in Mexico who use the United States as a whipping boy and scapegoat. He called for mutual respect between the two countries.

--He thinks that illegal immigration is a “very serious” problem, and that it is important for the United States to control its own borders. At the same time, he said, the United States must honor and respect human rights of all visitors and not allow them to be exploited.

‘Social Discombobulations’

On the subject of Mexico’s problems, Gavin said the government should address the structural problems of its economy, even if it means dealing with “social discombobulations” caused by lowering subsidies, for example. Anything else, he said, is only temporary.

Specifically, he suggested that Mexican officials re-evaluate foreign investment by making it more attractive and by reconsidering the government’s involvement in the economy.

According to Gavin, a U.S. study showed that 70% of the Mexican economy is owned or controlled by the state. He admitted that those figures are disputed by Mexican officials, but he said that even if the total is 45%, it is still an “enormous stake.”

“It (state control) has been shown, with all respect, not to be effective, not to be efficient, not to produce profitable industries, but is said to defend and protect inefficient jobs when you should be creating wealth and efficient jobs,” he said.

Investment Decision

On a Southern California issue, Gavin discussed the reasons that an investor group to which he belongs, led by producer A. Jerrold Perenchio, pulled out of bidding for KMEX and four other Spanish-language television stations.

He said that an offer book put together by the investment banker for the station’s owner, Spanish International Communications Corp., showed that “the situation was much more complicated” than the group had realized. In addition, he said, the potential price for the station “had gotten out of hand.”

The stations were put up for sale after a Federal Communications Commission administrative law judge recommended that their licenses be revoked because they are secretly controlled by foreign interests. The federal body has since reached a preliminary agreement with the owners to drop its challenge to the licenses if the stations are sold.