Going south

Andres Martinez is a senior fellow at the New America Foundation.

Your neighbor needs your help. Do you have it within you to lend a hand? Will you book yourself a week on the beach in Cabo or Puerto Vallarta, or explore Mexico City or one of the colonial cities in the heart of Mexico? You know, for the common good.

This has been a banner decade for empathy tourism -- many Americans flocking to New York after 9/11 and to New Orleans after Hurricane Katrina did so with a sense of public service. Mexico now needs a similar surge.

Our neighbor to the south is having an annus horribilis, as a British monarch might say. These were never going to be good times down there, with Mexico’s economy so intertwined with ours, but growing concern about war-on-drugs violence, the decline in oil prices and the advent of swine flu has further dented “brand Mexico.” Adding insult to injury, Washington earlier barred Mexican trucks from coming into the United States, a flagrant violation of the North American Free Trade Agreement, and, as of last week, Americans crossing over to Mexico were required to have a passport to reenter the country, a change expected to deepen the slump in border towns frequented by Americans.

The tourism sector is the largest employer in Mexico and the third-largest source of foreign currency for the trillion-dollar economy, after oil exports and remittances sent home by Mexicans working in the U.S. It is estimated that the swine flu alone will cost the country about $5 billion in tourist revenue (and bear in mind that travel to Mexico was already down significantly as a result of the U.S. recession). Hotel occupancy rates in Cancun in May didn’t even reach the 30% mark. The all-clear has been sounded on the virus, but no one knows for sure how long-lasting the impact on tourism will be. Mexico’s gross domestic product, meanwhile, is expected to contract about 12% in the second quarter of this year.

Why should Americans care? Well, for starters, there is the national security imperative. Say what you will about Mexico, and there is plenty negative to be said, our southern neighbor has been a fairly reliable, stable and friendly partner for more than half a century, and it is in our interest to keep it that way. Our nation’s political discourse may not always reflect our good geographic fortune, which we take for granted, but the United States is blessed to have Canada and Mexico as neighbors. Is there another developing nation of more than 100 million people we’d rather have on our southern flank? Put differently, how many other global powers in history have had the luxury of a long land border that doesn’t need to be protected by a large standing army?


Suddenly this year, the Pentagon and many pundits on the right have been raising the specter of a potential “failed state” on our border, the result of the lawlessness bred by powerful drug cartels. The rhetoric is a bit overheated, the comparisons to Pakistan misplaced, but the concern about what is happening in Mexico, our third-largest trading partner, is laudable. We have a strong national interest in seeing Mexico remain a peaceful, ever-prospering democracy.

The importance of Mexico to the United States is a truth not often voiced, but occasionally acknowledged by deed. Mexico traditionally ranks somewhere between Jordan and Argentina on the foreign policy establishment’s list of priorities. The amount of resources devoted to cross-border development or mutual security is pitiful (even in the aftermath of the anti-drug initiative known as the Merida plan), compared with development or military aid distributed elsewhere, not to mention compared with regional development transfers within the European single market.

But a far more robust commitment to Mexico does assert itself when required, as we saw during the 1990s, when the Clinton White House, bypassing Congress, made about $20 billion in Treasury reserve funds available to Mexico during that country’s last financial crisis. And this year too, Mexico is proving itself to be, not unlike AIG or Citigroup, too large to fail from Washington’s perspective, as the Federal Reserve has made available to Mexico a $30-billion currency swap facility, which gives that nation’s central bank privileged access to credit from the Fed in order to stabilize the value of the peso.

It would improve the overall health of the relationship, and our ability to think strategically about Mexico’s (and hence regional) development if presidents were more transparent about the country’s true stake in Mexico (sorry, Jordan), rather than make such commitments on the sly.

The fact that the United States bears some responsibility for Mexico’s current woes is another reason to invest in our neighbor’s stability and prosperity.

Unlike previous financial crises that have roiled Mexico, this one can’t be pinned on its macroeconomic sins. If in the mid-1990s it was fashionable to talk about the “tequila effect” to describe the global financial contagion spreading from emerging markets, this crisis is more like a “Budweiser effect,” in that it was Uncle Sam’s reckless insistence on living beyond his means that caused the mess. Washington, irresponsibly over-leveraged to support an unsustainable standard of living, failed to practice what it preached over the last decade, to abide by the so-called, um, Washington consensus on economic policy.

Mexico, for its part, has enacted prudent fiscal policies, shored up its foreign reserves and remained a faithful adherent to the free-trade gospel, continuing to open its economy to foreign goods and investment. The nation has also become a great deal more democratic in the last decade. Still, despite doing all the “right” things according to the Washington consensus, Mexico’s economy (and currency) has been harder hit by the Wall Street-triggered crisis than the United States’. No one said life was fair.

Americans also share some of the responsibility for the mayhem unleashed by the showdown between the Mexican state and its rapacious drug cartels, as both Secretary of State Hillary Rodham Clinton and President Obama were right to point out in recent months. Drug users in this country are underwriting the war in Mexico -- and that war is being waged largely with guns brought in from this country.

The United States is not about to criminalize guns and legalize drugs to help out Mexico. But you can do your part to help out a good neighbor -- book a trip south. Pronto.