Carlos Salinas : Pushing Mexico From Third World Into First

<i> Nathan P. Gardels is editor of NPQ magazine. He interviewed Carlos Salinas at Los Pinos, the presidential mansion in Mexico City</i>

Carlos Salinas de Gortari, Mexico’s 42-year-old president, has adopted a mission more heroic than merely ambitious: He wants to heave his nation of 82 million people from the Third World into the First World.

Salinas has wasted no time in moving toward this goal that would take well into the next century to accomplish. In a radical departure from the nationalistic stance of previous Mexican administrations, the route to that future for Salinas is through a North American free-trade area. Negotiations with the U.S. over a free-trade agreement will be at the top of the agenda when he meets President George Bush on Monday in Mexico.

Since much of Salinas’ far-reaching program has involved privatization and restructuring of an inefficient, nationalized economy, his reforms are seen as a Mexican version of Mikhail S. Gorbachev’s perestroika-- “Salinastroika.”

Many critics have charged, however, that his bold moves in economic reform have not been matched by democratic political reforms. In a particularly stinging accusation recently, the Latin American novelist Mario Vargas Llosa called the Mexican system “a perfect dictatorship” where the all-powerful president manipulates the trappings of democracy to reaffirm his own authority and the one-party rule of the PRI (Institutional Revolutionary Party) that has not lost a national election since its founding in 1929.


The unlikely sweep by the PRI in key local legislative elections two weeks ago has again placed the issue of electoral fraud at center stage, prompting calls by the opposition parties for international supervision to assure fair elections.

Although the precise facts of the voting process in the state of Mexico remain murky, the outcome has made Salinas’ reform strategy manifestly clear: Free trade, not free elections, is what Mexico needs most. Indeed, he seems to feel that this approach is the surest way to prevent “Salinastroika” from sliding toward the dark fate of Gorbachev’s perestroika-- a dangerous disintegration of society due to economic failure.

Such a strategy is undoubtedly less than democratic, but in a country with so violent a history as Mexico it may not necessarily be unwise.

Unlike the formal and pretentious Mexican politicians of past generations, the personal style of the youthful Harvard-educated president is open and informal, a style that suits the farsighted vision of a man proud of the fact that his three teen-age children all attend a Japanese school in Mexico City.

Question: The Mexican poet Octavio Paz has said, “The precedent of European integration is very important for the future of our region.” Having a common market and political community like the Europeans in 1992, he suggests, would be good for the Americas. Do you share this vision?

Answer: No. My vision stops at the free-trade area. Although we expect a positive outcome of the Uruguay Round of the GATT (General Agreement on Tariffs and Trade) talks (aimed at liberalizing global trade), it is nevertheless clear that world trade is concentrating in three huge blocs: the U.S. and Canada; Europe; Japan and the Pacific Asian countries.

Either you have access to the huge trading blocs or you are left out of the dynamics of development and growth. And, for a country of 82 million people--to which 10 million more will be added during my administration--growth is a necessity. So, I decided that it was time for Mexico to recognize this reality and belong to this future by building on the already very strong trade relations we have with the United States. Along with Canada, we can create the biggest free trading area in the world.

A common market and community goes beyond this. It implies a common currency, a common parliament and even a common army. It actually erases borders. That is not what we want here. Negotiation of the type of agreement that we seek to reach with the United States will not entail any topic that is not strictly limited to the sphere of trade . . . . We shall keep our autonomy in other areas intact.

Europe has other characteristics. We wish them well.

Q: Mexico has already gone a long way toward free trade--the average tariff five years ago of 100% has been reduced to 9%. Is Mexico more open to trade and investment than the U.S.?

A: That is absolutely true. Mexico is open at the border. The U.S. is closed at the border. Goods coming from the U.S. that arrive at our border can enter almost freely, but Mexican exporters do not have certainty of access to the American market and sometimes not even the possibility of access.

This is true in a range of areas, from textiles to cement to vegetables. There are many non-tariff administrative impediments and unilateral decisions.

Let me take a specific example: brooms. We used to export brooms which are manufactured by very poor people in the center of Mexico. Suddenly the shipment of brooms was stopped by U.S. customs. Why? They said it was because brooms are manufactured in the U.S. by the blind.

So, we did some research and found out that 2% of brooms manufactured in the U.S. are manufactured by the blind while 98% are manufactured by machines that are, no doubt, blind.

We want, instead of this, a relationship that gives us certainty of access to the biggest market in the world, a certainty of access that U.S. exporters already have in the Mexican market. That is why we want reciprocity. . . .

Q: What are the advantages for the U.S. in this free-trade agreement?

A: First, U.S. goods would have access to a growing Mexican market. Can you imagine a growing market of 82 million people? That would mean the creation of additional jobs in the U.S. through expanding exports.

Second, Mexicans would be able to find jobs in Mexico and wouldn’t have to look for them in the United States . . . .

Q: How do you respond to the fears in the U.S. that free trade will mean loss of manufacturing jobs because companies will locate where wages are cheapest? In Mexico that average wage is 84 cents an hour.

A: First, those are jobs that would be lost in the U.S. anyway, if not to Mexico then to the Asian Tigers (Singapore, Hong Kong, South Korea, Taiwan) or other newly industrializing countries.

So, it is better that these jobs are created in a country where the nationals might be tempted to compete for jobs in the United States.

Second, our perspective is not to have such low wages forever. On the contrary, we want not only more jobs, but better paying jobs reflecting productivity. . . . The higher the wages and the larger the employment in Mexico, the bigger the purchasing power for U.S. goods.

Q: Jobs might also flee as firms locate in Mexico where environmental standards are less strict. For example, since the air - quality authorities in Los Angeles introduced strict control of paint solvents in firms that make furniture, some 40 firms have moved or are planning to move across the border.

A: We do not want dirty growth in Mexico. We don’t want polluters here. And along the border, we are introducing strict penalties for polluting companies. In this, we are acting decisively.

SEDUE, the Mexican equivalent of the U.S. Environmental Protection Agency, already has regulations that say any firm in Mexico within 100 kilometers of the U.S. border must abide by the federal U.S.-EPA standards as well as the environmental regulations of the U.S. state near which they are located--California, Arizona, New Mexico or Texas.

To take one example, through SEDUE action a new company in Tijuana called Productos de Madera de Baja California, which paints doors, was recently made to install a spraying chamber similar to that required by authorities in Los Angeles.

Q: If a free trade pact is fair for Mexico, don’t workers have to be able to move as freely across the border as goods?

A: During the current negotiations, we are dealing mainly with trade. But sooner or later we will have to sit down and look at labor mobility. The sooner the better. I am for the free movement of labor.

Q: With such a large wage differential, won’t such free movement of workers mean more immigrants moving to the U.S.?

A: I believe Mexicans go to the U.S. looking for jobs, but they want to return. If we provide job opportunities for them here, they will remain. They are very attached to the land and their nation. . . .

Our studies on this matter indicate that 98% of those migrating to the U.S. looking for work will be willing to return to Mexico if they can find a job here. Or else, they work for a couple of years in the U.S. to build some savings and return to Mexico to open a small shop or otherwise raise their standard of living.

Q: You have said that “eliminating extreme poverty” is one of your highest priorities. But you are also eliminating subsidies on staples such as tortillas. How do you square those two objectives?

A: It is true that we have decided to cut general subsidies because we were subsidizing the rich as well as the poor.

Take the case of the price of tortillas. The richest Mexican would pay the same price as the poorest Mexican. Tortilla subsidies cost us $1 billion a year!

So we decided to eliminate the subsidies for the rich, and even middle-income groups, by substantially increasing the price by 137%. But at the same time, we determined, after about 10 months of detailed research, that any family that earned twice the minimum wage or less deserved a subsidy. That means five million families in Mexico will get a card with magnetically taped information which will enable them to get every third day one kilo of tortillas at no cost at all. At the same time, we have reduced subsidies by half.

A similar program applies for almost 2 million children who get subsidized milk while everyone else must pay the market price. Also, some 2 million children who previously didn’t finish their primary education because they had to quit to help their families earn additional income, now receive a cash subsidy to finish primary school . . . .

Q: In your State of the Nation address in early November, you said you would pursue political reform with the “equal magnitude of intensity” as economic reform. Yet, the perception abroad is that you are for perestroika, but not glasnost-- that is, increased political freedoms. What have you done to improve political freedoms, what more do you plan to do?

A: First, freedom of speech has been here for decades in Mexico. You can open the newspapers and read whatever you want; people can write whatever they want to write. . . .

Q: But critics charge that the government subtly censors the media--for example, through the control of newsprint.

A: Oh--ha--just read the papers and make a decision yourself. You know, I have proposed the privatization of PIPSA, the state-owned newsprint monopoly that was considered to be the source of this supposed censorship. I have also decreed the free import of newsprint at market prices. And, we are also privatizing four state owned TV channels, leaving only one nationwide television network in the hands of the state.

Please, in Mexico you have the freedom of movement, freedom of commerce and industry--90% of the GNP is produced by the private sector.

Freedoms of what you call the glasnost kind have existed for decades in Mexico. What hasn’t existed is the freedom of productive activity because the government owned so many enterprises.

So, actually, we have been more rapidly transforming the economic structure while striving along many paths of reform on the political side. But, let me tell you something. When you are introducing such a strong economic reform, you must make sure that you build the political consensus around it. If you are at the same time introducing additional drastic political reform, you may end up with no reform at all. And we want to have reform, not a disintegrated country.

Q: Unlike Gorbachev with his troubles . . .

A: No comparisons in any way.

Q: . . . you seem to believe that democratic change must be preceded by successful economic reform?

A: I believe that what people demand first and above all is to have a better standard of living in an environment of liberty and freedom. Those go together. And I am convinced that as we move along the path toward consolidating our economic reforms, political reform will continue to evolve in Mexico.

Q: Speaking of liberty, Americas Watch issued a critical report on human-rights violations in Mexico, arguing the police were beyond the rule of law. What have you done to improve the situation?

A: We have had abuses of human rights in Mexico, but the policy of the government now is to punish those who commit such violations. I have a personal, political and moral commitment to punish those who violate human rights.

At the same time, you must understand, we are waging a war in peacetime--the war against drug traffickers. We have decided to go against them very hard. In the process, some abuses have been committed. And we are punishing the perpetrators.

That is why I created the National Human Rights Commission. Its members include such respectable and diverse figures as the novelist Carlos Fuentes, the head of the Jesuit university and the editor of La Jornada, a newspaper generally critical of the government, among others. The recommendations of this commission are being followed by the authorities, and sometimes they collide with our efforts in the drug war.

For instance, just recently the commission demanded that a very notorious drug trafficker be released because in the process of arrest his human rights were violated. Even though the attorney general objected, saying that if this guy was released we would set loose againone of the top traffickers, I have nevertheless stated that even the rights ofdrug traffickers must be respected. You have to recognize we are facing this problem.

The commission has also recommended that confessions obtained by the police not be the only evidence required to place someone in jail. Some members of the police have obtained confessions through undue pressure. Additionally, the commission has recommended that those coming from Indian villages cannot be detained for more than 72 hours without charge or tried without an interpreter.

Based on these recommendations, I am sending a bill to Congress to change the law accordingly. As soon as we finish talking, I am going to sign the letter of submission so it can be sent to Congress for approval. My commitment is that impunity will no longer exist in Mexico.

Q: Can you foresee, one day, a president of Mexico who is not a member of the PRI?

A: Ask the voters . . . . Competition is getting tougher, no doubt.