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When Jimmy Carter toasted José López Portillo on the occasion of the Mexican President's mid-February visit to Washington, he drew a laugh from those assembled in the White House State Dining Room by saying, "The Mexican people know what Yankee imperialism means, and being from Georgia, I have also heard the same phrase used." He went on to add:
There has been a saying of one of President López Portillo's predecessors, "Pobre México. Tan lejos de Dios, tan cerca de los Estados Unidos," which means in English, "Poor Mexico. So distant from God, so close to the United States." But I know that under President López Portillo's administration the distance from God has become much less and the proximity to the United States, I hope, will become a blessing and not a curse.
Earlier in the day, when greeting President Carter on the White House lawn, President López Portillo had remarked:
To be neighbors means to share everything, the good things and the bad things, too. We are absolutely convinced that it would not be correct to enhance the bad things that life brings on its own. On the other hand, friendship makes it possible for us to make progress by deepening and enhancing all good things. Therefore, it is advisable for good neighbors to be good friends.
Remarks on official state occasions are notoriously thin threads on which to hang weighty analyses, but as symbols they are not without their usefulness. To have Yankee imperialism—hardly a joking matter to most Mexicans—even mentioned in the White House suggests a modicum of historical candor. And certainly, whatever the López Portillo administration's relationship with God may turn out to be in the long run, one can only hope along with both Presidents that there will be more blessing than curse in Mexico's necessarily close relationship with the United States. But what realities must this hope confront, and what aspects of the total situation can actually be improved upon?
When President Carter referred to Yankee imperialism he probably had in mind U.S. military actions, especially the Mexican War of the mid-nineteenth century during which General Winfield Scott occupied Mexico City. In the subsequent treaty, the young republic lost almost half her territory to the United States—invaluable lands comprising what are today the states of Texas, California, Nevada, Utah, and parts of Colorado, New Mexico, and Arizona. If official memory extends into the twentieth century, President Carter might also have been alluding to the U.S. Navy's occupation of the port of Veracruz in April of 1914, an action costing no less than 300 Mexican lives and adding little to Woodrow Wilson's reputation as a man of peace. What the President assuredly was not referring to was imperialism in the more modern sense of the extension of financial and corporate control across frontiers in ways that distort the development of the host country, denationalizing and stripping power from ostensibly sovereign elites and peoples. The President, in fact, touched sensitive ground with his toast, for if Yankee imperialism has any dominant meaning in Mexico today, it clearly refers to the U.S. economic presence, not the dusty troops and steaming gunboats of times past.
However evaluated, there is no question but that the U.S. presence in the Mexican economy is enormous. Almost 70 percent of all Mexican exports are directed toward the United States, and better than 60 percent of Mexican imports are of U.S. origin. The United States is the primary source of direct foreign investment (over three billion dollars at present—up from $1.2 billion at the start of the 1970s), not to mention the overwhelming U.S. influence on tastes, consumption patterns, and mass media content. By the end of 1976, U.S. private banks were carrying the impressive total of $11.5 billion in outstanding loans and credits to Mexico, an increase of $2.5 billion over the previous year's figure. U.S. tourism and dollar remittances from the millions of Mexicans both legally and illegally in the United States are critical to Mexico's balance of payments; and, until the devaluations of last year, peso parity with the dollar was a keystone of national policy.
The centrality of the United States to the Mexican economy necessarily implies a wide range of influences and pressures on both public and private decision-makers south of the border. Although nationalistic egos continue to be bruised by this reality, it is widely acknowledged in practice. Thus, when López Portillo came to the United States in February, his meetings with representatives of the U.S. banking community followed hard on the heels of his meetings with the President. Although it is difficult to imagine an analogous scenario if Jimmy Carter had gone to Mexico, in this case it was clearly the "logical" and even necessary thing for the Mexican President to do.
The extensive involvement of the United States in the Mexican economy also helps put into perspective the seemingly endless cascade of issues that agitates relations between the two countries. However much newsplay and policy attention they may get at times, issues like the treatment of U.S. prisoners in Mexican jails, the flow of heroin into the United States, Mexican support for the anti-Zionism resolution in the United Nations, Colorado River salinity, the theft of archeological treasures, and even ex-President Echeverría's sponsorship of the controversial Charter of Economic Rights and Duties of States are not the basic and enduring stuff of U.S.-Mexican relations. This is not to say that they are not important, especially to particular groups at particular times; but they do not go down to the bedrock, to the basic structure of interests which links the two economies—albeit at times antagonistically.
With good management, a modicum of good will, and some intelligence these kinds of issues are, in one fashion or another, resolvable. Some, like salinity and prisoners, can actually be removed from the negotiating agenda through treaties, agreements, and cooperative action. Others, like the Zionism flap and Mexico's aggressive advocacy of Third World positions, yield to policy reversals and a bit of well-constructed silence. But when economic bedrock is touched, no such relatively easy resolutions are to be found.
A classic example is Mexico's oft-repeated requests that trade and tariff barriers be lowered to allow Mexico's exports easier access to U.S. markets. This, of course, is not an issue specific to U.S.-Mexican relations, but rather one that can be generally applied to almost all trade relations between the more- and less-developed worlds. As has typically happened in such cases, these requests run into broadly based protectionist counter-pressures from U.S. interests that stand to lose from liberalized trading policies. Thus, since the United States cannot easily respond to the requests, and since Mexico must in its own interest continue to press for freer access, the issue simply will not go away. In fact, the bilateral clash around liberalized trade may, over time, become even more acute as U.S. manufactured and other goods come under accelerated pressure from exporters in both the more- and less-developed countries, thus further narrowing the already restricted room for maneuver that now exists.
Perhaps the thorniest bedrock issue specific to U.S.-Mexican relations involves the millions of undocumented Mexican nationals living and working in the United States. No reliable approximations of the total number of "illegals" in the United States are available, but estimates range from a low of four million to a high of over ten million. Taking the midpoint of this range, and assuming that approximately 60 percent of the total are Mexican nationals, a reasonable guess is that at any given moment there are about four million undocumented Mexicans in the United States.
More exact figures are relatively unimportant, for it is clear that the numbers are very large and the controversies that surround their presence in the United States more than sufficient to fuel debate for years to come. As workers they are located in the lowest paid and least desirable jobs, supplying cheap labor (often at wages well below the established minimums) to industry, agriculture, and the service sector. Resented by organized labor for ostensibly "taking jobs away from American workers," criticized by righteous taxpayers and politicians for allegedly draining off a disproportionate share of welfare services, and often preyed upon by criminal elements before, during, and after their journey north, their lot is by no means a happy one. And yet they continue to come, by the tens of thousands every week.
Their reasons for leaving Mexico are not far to seek. Predominantly younger males from impoverished rural communities, they flee poverty and unemployment in Mexico, drawn by the promise and possibilities of economic opportunities in the north. However miserable these opportunities may seem to northern eyes, they look quite different when viewed from a small town in Sonora. So across the border they come, sometimes making it on their own, sometimes smuggled across by coyotes who charge high fees in advance to their human contraband and then often also collect substantial payments from the employers to whom they deliver the low-cost labor.
As living testimony to multiple developmental failures, the northward migration is a substantial embarrassment to the Mexican government. But on almost all other counts it is a very positive phenomenon when viewed from the perspective of Mexican elites. What is perhaps most important is that the migration annually drains off hundreds of thousands of persons who would otherwise swell the ranks of the unemployed. In so doing, it undoubtedly slows in some measure the already cancerous growth of major metropolitan areas by keeping families in the rural areas who might otherwise gravitate to the larger cities in search of work and other opportunities. Finally, annual remittances back to Mexico from workers employed in the United States may now total as much as three billion dollars, a sum exceeding Mexican income from all tourist-related activities, and thus a crucial if not always acknowledged component of Mexico's balance of payments.
In the light of these advantages to Mexico's ruling elite, and the clearly destabilizing consequences that any major campaign of deportations back to Mexico would have, it is little wonder that both U.S. and Mexican policymakers usually move cautiously when trying to deal with this issue. Yet be dealt with it must, at least in the United States, for multiple pressures exist to render the border less permeable. Various scenarios and programs have been proposed and are under discussion, ranging from stricter security measures, to various kinds of identity cards, to fines for employers who knowingly hire undocumented workers. But, at best, all such proposals treat symptoms or peripheral aspects of the real problem, and many carry with them serious potential for infringements of civil liberties.
The more basic truth is that the locus of the main structural conditions leading to this immigration is in Mexico, not in the United States, and it is there that the major remedial actions must be taken. Very large scale and carefully designed programs of rural development and job creation are needed to make the north and central plateau of Mexico at least minimally attractive to the tens of thousands of new job seekers who come onto the labor market each year. If such programs are not forthcoming, all the electronic gadgetry, registration cards, fines to employers, and forced deportations that the United States can muster will not keep Mexicans at home.
This does not imply that there is nothing for the United States to do. On the contrary, if Mexico were to undertake the kinds of programs needed to make a dent on poverty and unemployment, U.S. support in the form of capital, technology, and revised tariff schedules would be essential precisely because of the economic dependence previously mentioned. But to date there are few indications that the resources, organizational models, and political will needed to mount such programs will be forthcoming, and the logic of Mexican politics does not augur well for their appearance until such time as even larger cracks appear in the developmental facade.
The immigration issue thus suggests a basic truth about Mexico, in fact the basic truth conditioning U.S.-Mexican relations; despite the impressive growth of the Mexican economy (between six and seven percent during most of the postwar period), the primary benefits of that "miracle" have been distributed only to a minority of the population, although obviously the minority that counts in political and economic terms. As has frequently been pointed out, then, the twin continuing challenges for Mexican political elites are how to maintain rates of growth high enough to support and even extend the current system of rewards and socioeconomic payoffs, and how to ensure that those who do not benefit from the "miracle" do not become excessively troublesome.
There is an understandable tendency to divide recent Mexican history—at least since the most tumultuous years of the 1910s and 1920s—into six-year sexenios corresponding to presidential terms. But there is also a Mexican reality that cannot be compartmentalized so neatly, that does not correspond to the changing of the guard, that is at the same time both the source of presidential and elite power as well as the albatross hung timelessly around the necks of those who would rule. This is the Mexico of extremes, of boom, of misery, of violence, and of tragedy—the Mexico that sprang from the ashes of the Revolution.
Well over a million persons lost their lives in the years of bloodshed and turmoil that began in 1910 with the revolt against the dictatorship of Porfirio Díaz. Swept away by gunpowder, dynamite and machete were the old Porfirian stability and institutions, and along with them the growth and relative prosperity of the late nineteenth and early twentieth centuries. Also gone—at least temporarily—were the conditions which had resulted in foreigners contributing almost two-thirds of all investment in Mexico during the first 10 years of the present century. Brought to life was a set of egalitarian and nationalistic ideas and aspirations, expressed in the Mexican Constitution and a host of other documents that still echo—if sometimes hollowly—in the discourse of top-dogs and underdogs in Mexico today. But also created was a complex and at times contradictory set of centralized political and economic institutions that has resulted in the highest sustained postwar rates of economic growth in Latin America coupled with the maintenance and even intensification of extremes of wealth and poverty—all in the context of a political system that coopts (and when that fails, represses) dissent in a fashion that leaves less successful politicians amazed and even envious.
As multiple commentators have pointed out, this political-economic system, particularly in its post-World War II manifestation, depends heavily on rapid, capital-intensive industrialization, foreign inputs, fiscal stability, and the disproportionate distribution of rewards to foreign investors, certain sectors of local capital, and the expanding middle and professional sectors. Its major engine and goal is aggregate growth, and its major political requirements are working class and peasant quiescence coupled with the active cooperation of the more privileged sectors. "Confidence" in the system is critical: the confidence of foreign investors and creditors that growth and thus profitibility and creditworthiness will continue; the confidence of the domestic private sector that the advantageous conditions of the past will continue to prevail; the confidence of the ascendant middle and professional sectors that their children will live at least as well as they do in their recently acquired semi-splendor; and even the confidence of the underdogs that their misery and pain are being attended to, that they also are, in some sense, on the post-revolutionary agenda.
All this, and much more, represents the contradictory legacy of the Mexican Revolution and the ideologies and institutions that took root in its aftermath. No Mexican administration can long operate outside the boundaries set by this legacy, yet it is also by no means clear that the system which has served Mexican elites and their friends so well in the past is equal to the burdens that will be placed upon it in the coming decades. This is both the basic paradox of modern Mexico and the context in which the last several years of Mexican history must be understood.
When Luis Echeverría took office at the end of 1970 as the hand-picked successor of the out-going conservative President Gustavo Díaz Ordaz, his administration inherited not only the full range of contradictions and problems inherent in the postwar Mexican development model but also some particularly pressing political problems as well. As the implementer if not the architect of the pre-Olympics repression of 1968, Echeverría took office with serious personal, political liabilities—at least in leftist and intellectual circles. Furthermore, during Díaz Ordaz's closed and conservative administration, distributional policies had been even more regressive than usual, thus triggering new waves of rural unrest and working-class pressures for a larger share of the benefits of Mexico's impressive aggregate economic growth. Finally, long-standing governmental policies supportive of an "alliance for profits" between foreign and some domestic capitalists had alerted Mexicans in both the public and private sectors to the rate and degree to which the Mexican economy was becoming increasingly denationalized.
Once in office, Echeverría moved on a number of fronts to build political support and arrest the worsening distributive and denationalization tendencies in the Mexican economy. Announcing a policy of "shared development" instead of the "stabilizing development" favored by his predecessors, he established a special advisory committee to study and propose fiscal reforms. Although many of the proposed reforms never left the presidential office—and others proved almost impossible to implement—the specter of a Mexico organized in ways that were not quite so favorable to the owners and managers of capital was sufficient to trigger significant business opposition at home. Equally controversial proposals were promulgated to regulate foreign economic influence. Again, although all three of the laws that were finally passed were much watered down versions of the initial proposals, none was very warmly received by the international business community. Additionally, the Echeverría administration tried to build popular support directly, through costly wage, price, housing, and rural investment programs. Among the most dramatic were the activities of CONASUPO, a decentralized state agency which buys basic foodstuffs at guaranteed prices and then distributes them at correspondingly low prices in poorer areas, thus forcing down retail prices and undercutting the high profits traditionally earned by middlemen. When Echeverría took office, for example, CONASUPO was operating about 1,200 retail outlets; by 1975 the network had expanded to include 6,000 stores. Needless to say, the private sector regarded this as unfair competition.
But even as the Echeverría administration struggled with these and other reform measures—making multiple enemies in the process—the basic dynamics of the Mexican political economy ground inexorably on toward crisis. The macro-statistics tell part of the tale. In 1970, the consumer price index stood at less than eight percentage points over 1968 levels. By the end of 1975, it had risen more than 90 percent. During the same five years, federal expenditures grew from about 3.2 billion dollars to over 12 billion, opening the gap between government income and expenditure from about $500 million in 1970 to $3.3 billion by 1975. The trade, balance-of-payments, and indebtedness statistics were no more encouraging. Mexico's yearly balance-of-trade deficit grew from about one billion dollars in 1970 to over 3.5 billion by 1975. Reflecting this trend, the yearly balance-of-payments deficit rose rather steadily to approximately four billion dollars by 1975, while the accumulated public sector external debt had reached $14.5 billion by the end of the same year.
Other trends and statistics round out the tale. Agricultural production grew so slowly that per capita food production continued to drop—as it had since about 1960. With the most dynamic sectors of agriculture oriented toward export markets, massive imports of food were necessary for both nutritional and political reasons. The most optimistic employment statistics suggest that during the first five years of the Echeverría administration employment increased on the average less than three percent a year, while those seeking jobs increased much more rapidly. In round numbers this meant that at least 150,000 to 200,000 persons joined the already swollen ranks of the unemployed and the underemployed each year. In short, a "worst-case" scenario was in the making: reform rhetoric and activities sufficient to raise the expectations of the poorer classes while frightening and angering the private sector both at home and abroad; long-term worsening trends in employment, agriculture, trade, balance of payments, and indebtedness - all of which were exacerbated in the mid-1970s by worldwide recessionary and inflationary pressures.
If the full responsibility for this gathering storm—or even a major part of it—should not be attributed to the Echeverría administration, there is no question but that the President cast himself as the lightning rod for the tempest that followed, thus ensuring his place in history. On August 31, 1976, in a move that caught many by surprise though it had been talked about for many years, the peso was devalued for the first time in 22 years. With the peso floating "like a stone" (according to a phrase often and bitterly repeated in Mexico City and elsewhere), multiple reactions and even panic ensued. While Mexican and foreign dailies headlined "turmoil," "hysteria," and "crisis," as much as four billion dollars fled the country seeking safe harbor in Texas banks and elsewhere. Investment slowed down, inflation accelerated, unemployment rose, and the whole complex set of mechanisms by which devaluation and resultant dislocations and hardships are passed disproportionately on to the poorer sectors of society came into play. Twelve days before leaving office, when Echeverría expropriated tens of thousands of acres of prime land in the northern state of Sonora and turned them over as small parcels to peasants, talk of a military coup was heard for the first time in recent memory. Although there was never a consensus on who was supposed to "do" the coup to whom, the predominant version was that Echeverría would use the armed forces to maintain himself in office. It was the crowning touch to a period both absurd and tragic. And when the 1976 statistics were finally in, it appeared that the economy had grown only two percent during the year, that inflation stood at over 30 percent, and that the accumulated public sector debt was close to the $20-billion mark.
López Portillo's inaugural address poured oil on troubled waters, although the literal truth of the metaphor is just now becoming apparent. Proclaimed sober, conciliatory and pragmatic by businessmen, bankers, and most national and international spokesmen, it announced an "alliance for production" between the public and private sectors, a cutback in the growth of government spending, various incentives to stimulate investment, and the necessity of reaching "a well-balanced agreement on profits and salaries." The intended "balance" in this agreement was already apparent by early January when, with substantial support from labor leader Fidel Velázquez and the government-dominated Confederation of Mexican Workers, a ten-percent minimum wage increase guideline was pushed through for 1977—a figure far below expected increases in the cost of living.
Openly advertising his administration as undertaking the long, hard process of recovery from the difficulties of the previous sexenio, López Portillo vigorously courted allies at home and abroad. By the end of March, for example, the powerful Monterrey group of industrialists, the sworn enemies of Echeverría, had announced a six-year investment plan totaling 100 billion pesos (almost four billion dollars at current exchange rates). Other plans were under way to woo foreign investment, and conciliatory and cordial noises were heard on a set of bilateral issues between Mexico and the United States, ranging from tourism to prisoners. It was clear that as the first quarter of 1977 ended, the elusive "confidence" so necessary to the recovery of the Mexican economy was in relatively full bloom both north and south of the Rio Grande.
For both security and economic reasons, the stakes of the United States in the stability and continued growth of Mexico are immense. Thus, it was not surprising that the U.S. government moved swiftly though quietly in mid-1976 to support the peso when the devaluation and crisis-of-confidence storm was brewing. As early as April, Mexico received $360 million under its short-term lending (swap) agreement with the U.S. Federal Reserve. Other support from the Federal Reserve and the U.S. Treasury followed. These funds backstopped the announcement, on September 20, 1976, that Mexico had arranged a 1.2 billion dollar package of financial support with the International Monetary Fund (IMF)—a package strongly supported by the U.S. government and private interests.
First negotiated under the Echeverría government, and then softened a bit and ratified by the López Portillo administration, the IMF agreement is a classic, fiscally conservative, balance-of-payments oriented document. Projected for a period of three years, it establishes a three billion dollar limit on the net increase of public sector external debt for 1977 and sharply declining ceilings for 1978 and 1979. Through its targets for balance-of-payments, public sector accounts, and savings and investment, it puts substantial pressure on the government to tighten credit, squeeze wages, lower public spending, hold down foreign borrowing, and thus control inflation. At its first unveiling, it was warmly greeted by bankers, industrialists, transnational corporations, and fiscal conservatives of many nationalities. Needless to say, it was less well received by many Mexican politicians and técnicos, as well as workers and peasants who, even if they do not read the fine print, are well aware of who finally gets hurt when such austerity programs are followed to their logical consequences.
But in Mexico the resolution—or at least the management—of the contradictions inherent in an IMF-type program is seldom an either/or affair. As López Portillo told all who would listen when he was in Washington, to pump Mexico full of the harshest kind of deflationary and balance-of-payments medicine is not only to risk the health of the patient, but also to run the almost certain risk of what he pointedly called the "South Americanization" of Mexican political life. Although the details of that ominous phrase were never fully elaborated, at a minimum the President meant that if there were not enough resources to provide continued benefits to the more privileged sectors, with at least some consideration given to the basic needs of the majority, massive doses of repression would be needed to hold Mexico together politically. In short, the President said yes to an attack on "inflationary" wage increases and waste in government, yes to cooperation with and incentives to private enterprise, yes to international financial responsibility, yes to a good-neighbor policy toward the United States, but no to those aspects and targets of an austerity program that would bring in their wake unmanageable political problems. He thus called, in his own words, for an increase in supply not a restriction of demand.
To play the delicate game defined by these yes' and no's, additional capital is needed. By definition this can, in the short run, only come from foreign sources. Yet the IMF approach to the restoration of Mexico's health sets sharp limits to the amount of additional indebtedness that can be incurred. Is there a way out? The obvious answer is oil.
Mexico may be relatively far from God, but it is providentially close to large amounts of petroleum. No one seems to know with any certainty the quantities involved, but estimates now run from a low of 11 billion barrels to as many as 60 billion. If the 60-billion barrel figure is correct, it would place Mexico second only to Saudi Arabia in reserves. To date, only about ten percent of Mexico's potential oil-bearing territory has been explored, so the high end of the estimate may well hold. In any event, estimates of Mexican reserves have been changing rapidly, from 3.5 billion barrels at the end of 1974 to the present figures.
Almost immediately after taking power, the López Portillo administration moved to assure interested parties that these reserves would not be as closely held as they had been in the past. It was thus announced that during the 1976-82 sexenio, exports of crude and refined products would increase from about 100,000 to 1.1 million barrels a day. Even if no substantial increase in the price of crude is registered during this period, the export earnings generated from such a program would top $22 billion, more than sufficient to turn Mexico's balance-of-payments problems around.
This kind of expansion in Mexican production requires vast sums of investment and operating capital. The budget for PEMEX, the national oil monopoly, is scheduled to increase three-fold under the current administration. From the point of view of Mexico's managers and their friends in the United States, this is obviously money well spent, and thus there is every indication that foreign banks will be more than willing to lend against the promise of oil once they have sufficient indications that the bonanza is as substantial as it appears to be and that Mexico intends to push exports. Whatever tough-minded consensus once existed among the IMF, the U.S. government and the private banks about the debt limits and Mexico's creditworthiness is unlikely to survive this bonanza and its validation. In fact, there is evidence that it is already beginning to crumble. Increasingly dependent on Arab oil with all that that implies politically, alarmed by recent energy scenarios and proposals, the United States would no doubt rather buy petroleum and natural gas from Mexico than from almost any other supplier in the world. The banks will be willing and even eager to lend when Mexican oil is the collateral. And when the moment arrives, the austerity-minded bureaucrats at the IMF will either see the wisdom in a softening of debt limits or will find that an end run has been made around their "sound and sensible" package for levering the Mexican economy back to health.
As providential as this scenario looks, it touches only some of Mexico's problems. Oil may allow Mexico to slip away from the IMF but not from history. Oil exports, the related relaxation of debt limits, and the easing of some aspects of the austerity program give breathing space, another chance for hard-pressed Mexican politicians. But oil by itself cannot respond to peasants' demands for land; nor can it create hundreds of thousands of new jobs each year; nor can it keep millions of Mexicans from crossing the border; nor make rapid inroads on redressing a distribution of income that is one of the most unequal in the world; nor reduce public and private corruption; nor deal with the human and social problems generated by a population that doubles in size every 20 years. All that oil can do—and this is not to be scoffed at—is soften and perhaps postpone for some years the sharpening of the contradictions that are inherent in the Mexican development model. It cannot solve them.
What are the policy implications of all this for the United States? What does it mean to be a "good neighbor" to a Mexico laboring under these pressures and with these problems? A first and rather obvious answer is that one should avoid being a truly bad neighbor. This means at a minimum that there must be no massive deportation of undocumented aliens, no yielding to protectionist tendencies of the sort that would further restrict Mexico's access to U.S. markets, no insisting on the full implementation of IMF austerity programs, and no punitive measures against Mexico if it should sometimes take positions in international forums that displease one or another group or interest in the United States.
But the avoidance of bad behavior is only a beginning, and one which prudential statesmen are likely to see as in their immediate self-interest, given the potential importance of Mexican oil. In fact, the latter situation clearly creates multiple pressures for special U.S. concessions toward Mexico in respect to trade, finance, and the transfer of technology. Less obvious policy concerns derive from a more detailed understanding of the awesome nature of the developmental dilemmas faced by Mexico and the dangers that flow from their mismanagement or the difficulty, if not impossibility, of resolving them within the existing political framework. What is at issue is nothing less than the implications of the "South Americanization" process so ominously suggested by President López Portillo on his visit to Washington.
Given some familiarity with Mexico's history and developmental contradictions, one does not have to be overly imaginative to sketch South Americanization scenarios. Whether the precipitating event is a clash over wages, prices, employment, land, food, or services, all scenarios would have in common the rupturing of the Mexican political consensus, the widespread use of force to suppress dissident groups, and a much larger presence of the military in public life. Viewed from the United States, such scenarios would have very serious ramifications. Border problems would escalate as political migration and pressures were added to the already substantial economic pressures. If the Mexican armed forces and police were turned against their own citizenry at anything like the level of repression existing in Chile and elsewhere, at some point U.S. territory would surely be used as a base for exile attacks back across the border. Private investment and bank lending would suffer and the much vaunted climate of confidence would necessarily crumble. Sooner or later, U.S. citizens would almost certainly be killed if violence were at all widespread or long lasting. The political dynamics unleashed in the United States as families, interests, and established relationships were broken would be unpredictable but surely grave. Additionally, the blow to democratic forces and futures in Latin America would be immense, for the Mexican experience, with all of its shortcomings, still suggests that there are alternatives to brutal dictatorships and massive military intervention in politics.
To sketch such scenarios is not to predict their inevitability. But they are by no means fanciful, and a forward-looking and creative U.S. policy toward Mexico should explore ways in which their probability can be lowered. At one level this means a frank recognition of the "specialness" of the U.S. relationship with Mexico by virtue of the 2,000-mile frontier, the weight of the U.S. presence in the Mexican economy, and the scale and importance of Mexico to the United States. Although the "special relationship" idea is currently out of favor in this age of globalism, there is no other country of the world with which the United States shares so many human beings, so much common geography, and so much history. In the coming years the United States will surely find itself repeatedly discussing a wide range of issues with Mexico in a bilateral context—issues like energy, trade, immigration, capital flows and others that have clear multilateral implications. The challenge will be to respond to Mexico's needs while also maintaining some degree of evenhandedness elsewhere in the hemisphere and the Third and Fourth Worlds.
But an even greater challenge in the long run will be to find ways of supporting those aspects of Mexican development and political practice that promise to increase social justice. The challenge is immense. Not only is there an inherent danger in meddling with domestic issues in another country, but such a policy in respect to Mexico is especially delicate since historically the United States has contributed to tilting Mexican development away from egalitarian goals. Whatever other virtues their friends may attribute to the U.S. banks, corporations and functionaries located in Mexico City, a profound concern with the consequences of their activities for income distribution, employment, peasant agriculture, and deteriorating conditions of life is not among them. What has traditionally been good for the United States in Mexico has not necessarily been good for tens of millions of the latter's citizens.
There may indeed be no way to link U.S. government and U.S. business to the aspirations of the Mexicans who are the cannon fodder rather than the beneficiaries of Mexican development. But to fail to understand that a Mexico in which the fruits of development are not more equitably shared is also a Mexico which cannot indefinitely continue to be a "good neighbor" is to misread history and to ignore geography. The basic test of U.S. policy will thus not be the sophistication with which the oil bonanza is handled. Self-interest may counsel wisdom in this case. Nor will it be the extent to which bad-neighborly actions are avoided. Again, self-interest and diplomatic discipline are likely to curb the worst excesses. Rather, the real test, in Mexico as elsewhere, will be found in the extent to which the United States discovers ways to support those forces pressing for social justice. Such actions will not be in the interest of those who profit, literally and figuratively, from current arrangements. But in the long run, allying with those who still wish to make real the bread and freedom promised to all Mexicans 60 years ago will surely prove to be in the interest of the majority of citizens, both north and south of the Rio Grande.
 By comparison, all other less-developed countries combined held only $36 billion of U.S. bank loans and credits at the end of 1976. Whether the Mexican share of this total constitutes "overexposure," however, depends not just on the aggregate amount but also on a host of other political and economic factors.
 In claiming that these issues are resolvable, I do not mean to imply that the problems from which they derive can be solved in all cases. The traffic in brown heroin from Mexico is a case in point. Despite close cooperation between the United States and Mexico, and the participation of U.S. specialists and equipment in the destruction of Mexican poppy fields, only a minor dent is being made in the quantity of heroin available in the United States. The very fact of Mexican willingness to cooperate with the United States, however, whatever the outcomes of the program itself, leads to a reduction of the salience of the issue of brown heroin in bilateral relations—and in that sense a resolution.
 During the first half of the 1970s, the U.S. Immigration and Naturalization Service carried out periodic round-ups of undocumented Mexican nationals and sent them back across the border by plane, bus, truck, and even on foot. These operations reportedly caused near panic in the Echeverría administration where it was feared that they signaled the beginning of a policy of massive deportations. Perhaps the single most aggressive act that the Carter Administration could take toward Mexico would be to attempt to "solve" the alien worker problem in this fashion. All public statements and indications suggest, however, that no such deportation policy is currently contemplated.
 See the data and policy recommendations developed in Wayne A. Cornelius, Illegal Mexican Migration to the United States: A Summary of Research Findings and Policy Implications. Cambridge, Massachusetts, Center of International Studies, M.I.T., Monograph Series on Migration and Development, 1977.
 For a useful, critical analysis of the manner in which the promised revolution of social justice was subordinated to elite power and aggrandizement, see John Womack, Jr., "The Spoils of the Mexican Revolution," Foreign Affairs, July 1970, pp. 677-87.
 During the Díaz Ordaz government, Echeverría served as Minister of Gobernación (State Security). As such, he was directly involved in the pre-Olympic massacre at Tlatelolco during which as many as 300 persons were killed. This was only the most sweeping of many repressive actions carried out during the 1960s against workers, peasants, and students.
 To the extent possible, official Mexican statistics have been used throughout, as compiled and presented by the World Bank, IMF, U.S. Treasury Department, and other recognized sources. For useful additional data and analysis see Clark W. Reynolds, "Why Mexico's 'Stabilizing Development' Was Actually Destabilizing," testimony presented to the Joint Economic Committee, Subcommittee on Inter-American Economic Relations, 95th Cong., 1st Sess., January 17, 1977, Washington: GPO, 1977; and Latin American Economic Report, Special Report on Mexico, London: March 1977.
 There is no way to calculate the true figure. This estimate is from Latin American Economic Report, (ibid.). Nor is it known how much returned.
 Much to the relief of landowners throughout Mexico, the courts subsequently ruled that the expropriations were improper. The struggle, both in the courts and in the fields, is, however, far from over.
 See the Journal of Commerce, February 9, 1977, pp. 1-2.
 In February, the Mexican Petroleum Institute announced that a U.S. company "which enjoys prestige among the most important banks in the world" has been called upon to help verify Mexico's reserves.