A Savvy Move to Help Mexico : Loan guarantee should not be demagogued
Historian Paul Kennedy, in his celebrated book “The Rise and Fall of Great Powers,” expressed the opinion that in the long run Mexico would be a more difficult challenge for the United States than Eastern Europe had been for the Soviet Union.
That’s a pretty grim analogy, of course; and neither the United States nor Mexico should want a relationship of hegemony. But, with 20 million Americans of Mexican descent, many of them recent immigrants or the descendants of recent immigrants, the challenge of preserving stability in Mexico may also be compared to Russia’s nationalities problem. There are huge differences, of course, but there is a key similarity: In both cases, the traditional difference between domestic policy and foreign policy becomes increasingly difficult to maintain.
The Clinton Administration has asked Congress to approve a $40-billion loan guarantee to restore world confidence in the Mexican market and halt the devastating erosion in the value of the Mexican peso. The opponents of this assistance have attacked it as foreign aid, and as a result the initiative has landed in serious political trouble. But it is not foreign aid. It is economic self-defense almost as much as the Lockheed or Chrysler bailouts (and the Mexico proposal is not remotely a bailout) of past years were economic self-defense.
Even before the passage of the North American Free Trade Agreement, the Mexican and U.S. economies were growing steadily more interdependent. The border may separate the two nations, but it does not separate the two economies, and it only very imperfectly separates the two populations.
It is this last point that, post-Proposition 187, ought to speak loudest to California’s senators and to the California delegation in the House. No state stands to suffer more than California if demagoguery succeeds in torpe- doing the needed loan guarantee and economic distress sends hundreds of thousands of economic refugees northward.
In the long run, Mexico cannot fail to emerge with a developed economy. The only question is how large the disruption will be in the short run. Coping with a political uprising in Chiapas, the assassination of the leading candidate for president and the adjustment of its ruling Institutional Revolutionary Party to necessary political change, Mexico has been under acute but temporary stress during the last year.
Happily, its underlying economic vitality remains strong, and the measures taken by its government are all that our own government could ask. In the interest of the United States and, not least, in the interest of California, our elected representatives should take a leading role in rescuing the loan guarantee from its current grim slide toward defeat.
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Peso’s Plunge Peso’s per dollar, Monday closes since Dec. 19. Dec.: 3.46 Jan.: 6.30