Mexican Development Aid Not in the Offing, U.S. Says

When Mexican President Vicente Fox arrives at the White House on Wednesday to meet with President Bush on migration issues, there is one thing the administration would rather Fox not talk about: how the U.S. can help keep Mexican workers in Mexico.

Fox came to office trumpeting the need for increased U.S. development aid to Mexico to alleviate the poverty that millions of Mexicans flee for jobs in El Norte. But in talks this summer with their Mexican counterparts, Bush administration officials have made it clear that there is little political appetite--and no surplus budget funds--for addressing the issue any time soon.

That leaves Fox facing the prospect of endorsing an agreement with Bush on regulating the immigrant flow that doesn’t deal with what the Mexican leader insists is the genesis of the problem: demand for the sort of higher-wage jobs Mexicans can’t find at home.

But Fox may not have a choice.

“This is not an administration that is in the realistic position of providing massive support to Mexico. We’re no longer in the business of Marshall Plans in the United States,” said a senior U.S. official involved in the talks who asked not to be identified. “The political realities on the ground just are not in favor of this.”

Fox and his advisors are still trying to convince Washington that putting money into Mexican development is worthwhile.

“We need investment resources,” Fox told The Times last year. “It is easy for the U.S. to say, ‘Get the resources on the market,’ because [it] can do it. But for Mexico or other developing countries, that is very difficult. So although we can get part of what we need from the market, we also must get part of what we need from foreign direct investment.”

Such a support program was first proposed by Mexico years ago, when the two countries and Canada negotiated the North American Free Trade Agreement adopted in 1994. The United States did not agree to the proposal.

Since Fox took office in December, he has called for the expansion of the North American Development Bank, a public bank designed to finance anti-pollution measures along the shared border. He has called for bigger loans to Mexico from the World Bank and the Inter-American Development Bank, both heavily funded by the United States.

And Fox has made a strong pitch for a new development assistance program modeled on the regional development funds the European Union has set up to bolster the economies of Spain and Portugal.

That aid program was designed to spur job creation and reduce the incentive for people from those countries to immigrate to richer nations within the European Union.

Fox aides are scrambling to keep the idea on the table. Senior Mexican officials said this week that they will go to Washington with a broad menu of proposals for development programs on the border and in the Mexican interior.

Enrique Berruga, Mexico’s deputy foreign secretary for North America, said a program promoting economic development in migrant-sending regions “has to be part of the overall solution. You have to entice people to stay where they come from. Both for economic and demographic reasons, we want the migrant flow to decrease dramatically in the next decade. . . . We cannot give up the generation that is going to produce prosperity for this country. We cannot have this bleeding of people.”

He noted, however, that until mechanisms are created for cross-border development in migrant states, “we will have to do it on our own. That is part of our burden, and we have to do it for national reasons. But if it can be part of a wider [U.S.-Mexico] package, even better, because it is in the U.S.’ interest as well.”

Jeffrey Davidow, the U.S. ambassador to Mexico, told reporters in Mexico City this week that the United States is willing to talk with Mexico about economic development. He said that although substantial injections of U.S. funds are unlikely, the United States might be able to assist in other ways, such as charging low interest rates for loans on exports of U.S. capital goods to improve production.

The idea of expanding the reach of the border development bank has been particularly controversial. The bank has been largely impotent in the six years since it was created, ignored by both the U.S. and Mexican governments and unable to lend impoverished border towns more than a tiny fraction of its bulging vault. It has raised $304 million in six years. But it has made just seven loans, totaling $11 million, because its mandate is limited to environmental projects within 60 miles of the border and its interest rates are too high for most communities.

“President Fox has continued to raise it over and over again,” said UCLA professor Raul Hinojosa-Ojeda, who is advising the Mexican government on the issue. “Fox has been very frustrated at how he can make this happen.”

Fox advisors, led by Hinojosa-Ojeda, have proposed redefining the bank to make better use of loan funds. And they say they are close to agreement with their U.S. counterparts on major changes in the bank’s structure.

Berruga said he expects an agreement in Washington to restructure the border bank to make it more agile and possibly make it part of a binational planning commission for the border region.

“We cannot let the border grow as anarchically as it has done in the past,” he said.

But U.S. officials close to the talks say that although the Bush administration may agree next week to some tinkering with the bank, it has rejected proposals that call for increasing U.S. investment in it.

The Fox administration has “come to us with a proposal of taking [the bank] and turning it into something grander,” said a U.S. official who asked not to be identified. “We’ve come back to them and said: ‘This dog won’t hunt. It can’t even do what it was supposed to do. It cannot and it will not become a huge development channel to all of Mexico.’ ”

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Times staff writer James F. Smith in Mexico City contributed to this report.