September 27, 2007
Memo From Mexico,
By
Allan Wall
Calderon
Continues Mexican Mooching And Meddling
Felipe Calderon was
inaugurated as president of Mexico on December 1st,
2006. What he intends to do is now becoming clear: minor
reform—but basically more Mexican mooching and meddling.
In his
inaugural speech, Calderon said:
"Migration continues to
divide our families. Rather than having workers leave, I
desire to seek investment from the United States. It is
better that investment come here where our workers are,
that our families and communities no longer be
divided…To create the jobs that we need, it is
indispensible to remove obstacles that impede both
businesses and the economy from growing faster.
Important changes in economic policy are needed…"
Amen to that. As I have
pointed out previously, emigration
divides Mexican families and exacerbates social
problems in Mexico. Private sector American investment
helps Mexico. And, as Calderon said, Mexico needs to
"remove obstacles that impede both businesses and the
economy from growing faster. Important changes in
economic policy are needed."
In comparison with his
predecessor, Vicente Fox, Calderon exhibits much more
effective political skills. He doesn’t stick his foot in
his mouth as much as Fox did. His wife doesn’t meddle
like Fox’s did. Calderon is much more adept at working
with the rambunctious Mexican congress. And with the
current breakdown of political parties, he has a better
correlation of political forces at his disposal.
In nine months, Calderon
has already achieved more, legislation-wise, than Fox
did in six years, having pushed a pension reform and
fiscal reform through the Mexican Congress.
Nevertheless, the really
big and substantive reforms still lie ahead, such as in
the labor market and energy sectors. And they are more
controversial, and more difficult.
And Calderon, like his
predecessor, continues to
publicly bash U.S. immigration policy and demand
more from the U.S. (Just as
I predicted he would, by the way …)
I can’t help but think
the issues are related. After all, our open borders
provide Mexican leaders with a safety valve, allowing
them to avoid real reform.
I’m not alone in
thinking that. Among others, similar analysis has been
delivered by College of William and Mary Mexico-watcher
George Grayson and even
Banco de México chief Guillermo Ortiz.
In fact, Mexican
politicians have two economic safety valves – oil and
emigration. They rely on these to avoid making the
difficult decisions.
Tax evasion is rampant
in Mexico. It’s been
estimated that 40% of businesses and 70% of
professionals and small business owners cheat on taxes.
It’s been estimated that up to 50% of potential tax
revenues go uncollected.
So the government uses
state oil monopoly PEMEX as
a de facto tax collection agency. Indeed, the
state monopoly provides close to 40% of the Mexican
government budget.
And since PEMEX can’t be
run as a regular oil company, those funds can’t be used
in finding and developing new oil sources.
But that oil money won’t
last forever. Mexico’s biggest source, the Cantarell
field in the Gulf of Mexico, has
hit its peak and is now in decline.
Certainly, there is more
oil out there, deeper in the Gulf. But PEMEX doesn’t
have the technology to exploit it. And Mexico’s foreign
investment petroleum laws are more restrictive than
those of Cuba, so it’s hard to attract foreign partners.
The Calderon
administration recently attempted to fix the fiscal
problem, with
an ambitious reform that was supposed to crack down
on tax evasion, formalize the informal economy, increase
tax revenues, and put PEMEX on a sounder financial
footing. It sounded great.
The fiscal reform effort
was spearheaded by Danish-surnamed
Agustin Carstens, Calderon’s Finance Minister. He’s
an interesting character. Married to an American, heavy
metal fan Carstens has a PhD. in economics from the
University of Chicago and is a former IMF official.
He also appears to have
had a few too many tortillas (or something) along the
way. Or maybe it’s his gringa wife’s great
cooking (see
photo here).
After several months of
horse trading in the Mexican Congress, the fiscal reform
was finally passed in September. Investment bank Morgan
Stanley called it "a clear step in the right
direction", which it was.
But not a big step.
Mexico-watcher George Grayson
called it "reform lite" on Lou Dobbs on
September 17.
Mexican lawmakers had fallen back upon the
time-honored tradition of using oil to pay the bills.
The fiscal reform includes an increase in the price of
gasoline. That means that all Mexicans and foreigners
residing in Mexico (like yours truly) will be paying
more at the gas pump. The gasoline price hike is
scheduled for January 1st except for the price of
Premium gas, which can be hiked earlier. (Hmm, that’s
the kind of gas my family’s automobiles use.) But
despite the gas price rise and other tax modifications,
even the Mexican government calculated that that
fiscal reform will only bring in the equivalent of 1% of
Mexican GDP, although
some analysts put it as high as 2.5%.
So what do Mexico’s
leaders intend to do if oil production continues to
decline?
Well, they do have a
plan. That plan is to keep Mexicans emigrating.
That’s right, emigration
is their economic platform. That reduces social costs by
pushing them onto the U.S. (where Mexicans are more
demanding than they are in Mexico) and also gets
potentially troublesome Mexicans out of the country.
And Mexico’s leaders see
linking Mexico to the U.S. in some sort of formal
partnership/community/union as just a way to steer more
American development dollars to Mexico.
Last week, on September
21st, 2007, President Calderon attended an
event in the northern Mexican city of Monterrey. It was
the grand opening of an exposition entitled "América
Migración." Also in attendance was Miguel
Insulza, Secretary General of the OEA (Organization of
American States).
It’s important in this
context to recall that in Spanish, América
doesn’t mean the U.S.A., it refers to the
whole Western Hemisphere. That’s why at a
pro-illegal protest march in the U.S. you can
see a sign reading “America is a continent not a
country."
In his Monterrey speech,
Calderon naturally had plenty to say about migration. He
pointed out that Mexico, too, is a "nation of
immigrants":
"Just like all the other
peoples of América, las mexicanas (female
Mexicans) and los mexicanos (male and generic
Mexicans) are children of migration, of the fruitful
contact between different ways of thinking and of seeing
the world. We are heirs of the European culture and of
the civilizations that flourished in the Pre-Columbian
epoch. Throughout the centuries, our nation has been
enriched with the contributions of many immigrants who
for various reasons have made of this land their
fatherland and that of their children. Mexico would not
be comprehensible without the contribution of all of
them."
OK, no problem, Mexico
too
was formed by immigration (although the indigenous
population looms far larger in its gene pool than in
that of the U.S.). But guess where Calderon is taking
this …
"To open our arms to them
(immigrants), to adopt them as brothers, we Mexicans
have gained as much or more than they have. We have
gained not only in ideas and in new strength for our
development, but also in humanism, comprehension and
tolerance."
Calderon is saying that
Mexico "opens its arms" to welcome immigrants as
"brothers".
Well, they
let me in, didn’t they?
But in fact Mexico has
its own immigration policy—and it’s definitely not
an open borders policy. Illegal immigrants—most from
fellow Latin American countries
which are poorer than Mexico—are not received with
open arms at all. Some have been
shot and
gassed.
Anyway, by now Calderon
is getting to the point he really wants to make:
"That’s why our country
defends the rights and the dignity of those who migrate,
the necessity not only that they be respected but that
also they be protected."
This, in case you didn’t
get it, is directed against the U.S. It means more
Mexican meddling.
Calderon gives lip
service to economic reforms in Mexico:
"We are, of course,
working to create the conditions that would permit each
mexicana (female Mexican) and each mexicano
(male, and generic Mexican) to find here in his land and
not beyond the border, the opportunities of dignified
and well-paid labor that he deserves, that permit him to
add his strength and his talent to the transformation of
the country. Migration should be a choice and not the
only option, as it is up to now for millions of Mexican
families."
Calderon points out that
emigration
divides families and communities:
"Regardless of the
challenges that face us that are enormous, year after
year migration still divides thousands of families and
Mexican communities."
But the presidente
revisits the "Mexico is where the Mexicans are"
theme:
"…. for my government,
Mexico does not end at the border. Wherever there is a
Mexican there is the fatherland. That’s why we are
acting firmly and with determination to defend the
rights and promote the interests of our
fellow Mexicans abroad."
And he gets into the
"North America" theme:
"The walls and
the roundups are attacks against ours, yes, against
us. But they also attack the prosperity of the North
American region, as a unit that is swiftly losing
competitiveness against Asia and Europe."
Then he approaches the
"lost territory" motif:
"Ours is a people who only
seek a better future for their family. They seek it,
precisely, contributing their strength of labor to the
prosperity of an economy that is not of their land, but
paradoxically at one time it was. "
Whoa, now what is he
talking about? A land that was once theirs but now
isn’t? Why does he
bring that up?
Calderon stands firm,
and says.
"…. we continue believing
that the Mexican state and the Mexican society should
continue to support categorically and undoubtedly the
defense of the rights of migrants. We support a
migration that is legal, secure, orderly and above all,
respectful of human dignity."
And he claims that…
"I firmly believe that the
answer to the migration cannot be in building walls or
closing borders to the passage of persons, but to
generate opportunities in their places of origin, work
opportunities."
Wonderful—so why doesn’t
he concentrate on generating opportunities in Mexico and
not on emigration?
There’s more, but you
get the message. The fact of the matter is, it’s hard
for Mexican politicians to enact serious reforms, as
long as the Gringo safety valve exists.
And now, with
continental integration
supported by the Mexican government (albeit not
all Mexicans), they believe they can keep emigration
going and simultaneously get MILLION$ in U.S.
development aid.
This charade should not
go on a minute more. It’s time to close the border and
help Mexico’s leaders
get serious about reform. Otherwise, what incentive
do they have?
It’s called tough love
for Mexico.
American citizen Allan Wall (email
him) resides in Mexico, with a
legal permit issued him by the Mexican government. Allan
recently returned from a tour of duty in Iraq with the
Texas Army National Guard. His VDARE.COM articles are
archived
here; his FRONTPAGEMAG.COM
articles are archived
here his "Dispatches from
Iraq" are archived
here his website is
here.
