PERSPECTIVES ON FREE TRADE : A Stable Mexico, a Secure U.S. : Congress must approve the NAFTA treaty to help stabilize our neighbor and prevent cross-border chaos.

America’s strategic interests will be served if Congress ratifies the North American Free Trade Agreement (NAFTA) with Mexico. It is more than just a matter of economics--Mexico is far too important to the United States to risk the instability and violence that could ensue if recent political, economic and social progress is reversed.

Americans have short memories. The current relative peace and prosperity in Mexico makes it difficult to remember that just a few years ago, many experts--reportedly including the CIA--were predicting disaster. When President Carlos Salinas de Gortari took office in 1988, he faced a situation as dismal as Mikhail Gorbachev’s in the former Soviet Union--a disastrous economic picture, widespread political unrest and government institutions publicly revealed as corrupt and woefully inefficient. Inflation reached 159% by 1987. Unemployment soared as jobs were created for only 1 million of the 5 million new job-seekers over the preceding five years. Worse, real earnings (adjusted for inflation) had decreased approximately 40% as Mexico struggled against the twin burdens of low prices for oil, its most important export, and huge debt-service payments, amounting to 6% of the gross domestic product and equal to 60% of the federal budget.

Moreover, the breakdown of the one-party political system, dominated since 1929 by the Institutional Revolutionary Party (PRI), loomed on the horizon. Salinas succeeded the indecisive and ineffective Miguel de la Madrid, who had succeeded Jose Lopez Portillo, believed to have stolen as much as $3.5 billion in public funds.

Salinas has since confounded the experts. He has headed the PRI down the difficult path toward political pluralism and decentralization of power, successfully negotiated debt relief, taken strong action against corruption and drugs and begun to revitalize the economy through privatization and encouragement of foreign and domestic investment.

All of this is critically important to the United States, blessed with stability on its borders since the late 1920s after a century of Mexican civil wars, rebel-lions, coups and dictatorships. Mexico, rapidly becoming a regional power in Latin America, is our third-largest trading partner and holds the fourth-largest known oil reserves (most of the U.S. strategic reserve was purchased from Pemex, the state oil company). Should the economic system falter significantly, the worst-case scenario is very bad, indeed. We should recall that it was an economic crisis in 1907 that sparked almost two decades of bloody political chaos (including two U.S. military invasions), and also led to the first great wave of illegal immigrants crossing the border. If similar upheavals took place today, it would be in a country with a population approaching 100 million. Mexican refugees could number in the tens of millions, overwhelming social services, particularly in the U.S. Southwest. Nor, given the strong ethnic ties between the two countries, could we long ignore a truly repressive regime that might come to power. And of course the U.S. economy would suffer significantly.

Even with the best of U.S. intentions, including passage of NAFTA, Mexico faces a rocky road. Although its economy is once again growing (3.9% last year), other trends are ominous. Population pressures alone will put serious strains on Mexican prosperity and politics, as the population continues to grow more than 2.2% annually, becomes younger (half of the population is under age 15) and more urbanized. Everywhere the corrupting influence of narco-trafficking continues to erode institutions--police, armed forces, judiciary. But by far the most difficult task will be to transform the political system into a truly representative democracy.

The United States can no longer afford to take Mexican stability for granted. Benign neglect is not a policy option; our destinies are inextricably interwoven. Of all the places in the world where widespread instability and violence could erupt, Mexico is the one that should worry us the most. As Henry Kissinger said, “Mexico’s economic growth and political stability are vital to American interests.”

The North American Free Trade Agreement could be an important step toward helping to guarantee stable development.