Memo From Mexico | Calderon Continues Mexican Mooching And Meddling
September 27, 2007, 05:00 AM
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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.