The Americas Project Emerging Latin American Leaders Discuss ‘Future of Hemispheric Relations Through the Prism of Mexico’

The Americas Project
Emerging Latin American Leaders Discuss ‘Future of Hemispheric Relations Through
the Prism of Mexico’

BY DANA DURBIN
Rice News Staff
June 25, 1998

Issues of importance to the Western Hemisphere, with an eye on their effect
in Mexico, were the focus of the "Americas Project" held at Rice June
13-16.

Sponsored by Rice’s James A. Baker III Institute for Public Policy, the Greater
Houston Partnership and the Organization of American States, the program brought
emerging Latin American leaders to campus to discuss "The Future of Hemispheric
Relations Through the Prism of Mexico."

The young participants attended lectures given by Mexican political analyst
and writer Jorge Castañeda, Mexico’s secretary of finance and public
credit Jose Angel Gurría, and senior Clinton counselor and special envoy
to the Americas Thomas (Mack) McLarty. Panel discussions were also held, featuring
experts in issues facing the United States and Latin America.

In his speech here on June 16, Castañeda said that poverty and inequality
have finally been acknowledged as central features of Latin America, especially
Mexico, and that U.S. and Latin American governments now recognize the need
for a deliberate policy to reduce inequality.

Castañeda addressed the issues of poverty and inequality in Latin America–where
50 to 60 percent of the total population is considered either poor or extremely
poor–by examining the problems as they have affected Mexico. The professor
of economic and international affairs at the Universidad Nacional Autónoma
de México has written extensively about Mexico, including in his most
recent books, "Che Guevara" and "The Mexican Shock."

The paradigm in Washington, D.C., and elsewhere has finally shifted from the
need for economic reform to the consensus that poverty and inequality have historical
and structural explanations and cannot be eradicated through the "right"
economic policy, Castañeda said.

"Clearly, there is a major change when finally not only is the fact of
inequality acknowledged, not only the origin recognized, but the fact that you
require a policy to fight it. That’s an enormous change," he said.

The emphasis has shifted for several reasons, he said, including that some
Latin American countries, such as Chile, have had economic growth yet poverty
and inequality remain. In addition, poverty and inequality are being emphasized
now because the problems have led to increased social violence, particularly
in Mexico where kidnappings, holdups, land seizures and other crimes with social
and political origins are common.

Just what to do about poverty and inequality is a promising debate in Mexico,
Castañeda said. Over the past 30 years, there have been a series of efforts
to reduce inequality, he added.

"What everybody agrees on is, one, everything has been tried, and two,
nothing has worked. And this is a very important conclusion because it means
there is something fundamentally wrong with the attempts," he said.

Conclusions that have been reached, Castañeda said, include that there
must be the creation of jobs and there must also be tax reform. Tax revenue
is "falling through the floor," he said, and without that revenue,
poverty and inequality cannot be reduced.

In his lecture, also on June 16, Gurría said Mexico is a "useful"
and "hopeful" prism through which to view hemispheric relations, which
have been given an important push by Mexico and the United States through programs
like the North American Free Trade Agreement (NAFTA) that benefit the economies
of the countries involved. Mexico has also forged free trade agreements with
South and Central American countries, he said.

Most important in Mexico’s relations with the United States have been significant
economic and political changes, Gurría said.

Following the collapse of the Mexican peso in 1994, Gurría said the
government set mandates that have enabled the economy to remain stable even
during today’s period of economic instability in Asia and Eastern Europe. The
government has focused on fiscal balance and changing the way the government
deals with "external shocks," such as the drop in oil prices, which
are now offset through measures like budgetary cuts.

Gurría attributed the economic crisis to a drop in Mexico’s savings
rate, which, during the collapse, was only 15 percent of the Gross National
Product (GNP), but is now on the rise.

On the political front, Gurría said Mexico has achieved "democratic
normality," which is generally characteristic of more mature democracies.
Gurría pointed to a primary election system and more open political competition
and changes in campaign finance that vaccinate against corruption as evidence
of this democratic normality.

"Most relevant is the new political setup and the open economic relationship
with the United States. We no longer have to depend on how well the chemistry
[between leaders] works," he said, explaining that previously Mexico did
not build institutions that worked regardless of who was leading the country.

McLarty recognized this relationship as well, stating that President Clinton
and Mexican President Ernesto Zedillo have met many times over the past four
years to discuss issues of concern to the United States and Mexico.

But the countries’ leaders have done more than just meet, he said. The United
States passed NAFTA and later led the effort to restore order to financial markets
in Mexico and across the hemisphere, McLarty said.

"Together with the strong steps taken by the Zedillo government to open
and reform Mexico’s economy and deepen democracy, this has formed the basis
of a new relationship," he said. "We are neighbors, yes, but we also
seek to be partners: neighbors because of the border we share, partners because
of the values we increasingly share."

Nurturing a strong relationship with Mexico should be the keystone to a broader
policy of hemispheric engagement, McLarty said. And unless United States-Mexican
relations are consistently stable, diplomacy in the Americas will be unsustainable.

McLarty added that U.S. relations with Mexico and the hemisphere would not
be at today’s level of maturity and productivity if not for NAFTA. The trade
agreement has had a positive effect on Mexico, he said, and "signaled to
the rest of Latin America and the Caribbean that the United States was serious
about plans to move forward with a strategic hemispheric arrangement where free
trade would replace aid and where open markets and foreign investments would
create a community of inherent equals if they continued political and economic
reforms themselves."

The agreement to create a Free Trade Area of the Americas by the year 2005
was reached at the first Summit of the Americas in 1994 and the second summit,
held in Santiago, Chile, focused on improving education, strengthening democracies,
expanding trade and economic growth, and alleviating poverty.

"The road from the Spirit of Miami to the Promise of Santiago has now
brought each democratic nation in the Americas together in pursuit of a common
agenda to improve people’s lives," McLarty said. "That’s not to say
problems don’t continue to exist. Clearly, they do, but we now have a process
in place to handle the inevitable difficulties and issues as they arise."

For related information visit the following Web sites:
The James A. Baker III Institute for Public Policy: http://riceinfo.rice.edu/projects/baker/index.html
Speeches from the Americas Project: http://riceinfo.rice.edu/rtv/speeches/19980616americas.html