To Mexico with Love

Carter seeks friendship, but he will find grievances old and new

Two years ago, President Jimmy Carter raised a glass of champagne in a toast to his first state visitor at the White House, President Jose Lopez Portillo of Mexico. Said Carter: "The proximity to the United States, I hope, will become a blessing and not a curse."

It was not to be. Indeed, there is no border on earth that separates two more widely divergent standards of living, and conflicts over trade, illegal immigration and drug smuggling have soured relations between the neighboring nations. Energy Secretary James Schlesinger made matters worse by his high-handed treatment of Mexican envoys (see following story). Then, to stem the northward flow of illegal immigrants (nearly 1 million last year), U.S. authorities proposed sealing off parts of the frontier with sharpened steel-mesh fencing. Mexican newspapers indignantly accused the U.S. of raising 'the tortilla curtain."

This week, on St. Valentine's Day, Jimmy Carter flies to Mexico City for three days of heart-to-heart talks with Lopez Portillo as a long overdue step toward making good the promise of his White House toast. Carter will find his hosts expecting to be treated with far more respect than U.S. Presidents c have generally shown in the I past. "This time," said the conservative daily Novedades in an editorial, "Jimmy Carter and Jose Lopez Portillo meet as equals, and Mexico will be looking for signs that the U.S. recognizes this fact."

Mexico's touchy new self-confidence stems from the fact that for the first time in history, the poor relation has something that its wealthy uncle needs badly: a large and dependable supply of oil and gas. Two weeks ago, the Congressional Research Service reported that Mexico's energy supplies rival those beneath the sands of Saudi Arabia. Mexico has proven reserves of 40 billion bbl. and estimated potential reserves of 200 billion bbl. By comparison, Saudi Arabia has known reserves of 166 billion bbl. If the U.S. could eventually shift its oil dependence closer to home and away from the volatile Arabian Gulf that now satisfies about a third of U.S. imports, the country's security would be greatly strengthened. But other nations also are beginning to court the new Mexico. Japanese technicians have been exploring, Brazil is negotiating, and France's President Valery Giscard d'Estaing comes calling later this month.

The basic purpose of Carter's trip is to overcome years of bitterness and persuade the Mexicans that the U.S. is not only their best customer but also their best friend. His itinerary is very businesslike. After landing at Benito Juarez Airport and offering some good wishes in his Georgia-accented Spanish, Carter will go straight to the Mexican National Palace for the first of two private sessions with Lopez Portillo. He will lunch with Mexican diplomats, consult with the U.S. embassy staff and address the Mexican Congress.

Carter expects to strike no major bargains with Lopez Portillo. He hopes only to spur negotiations--on oil and natural gas, immigration and trade policies. Carter, says one adviser, "must restore a sense of mutual trust and cooperation. He's got to change the background music, get rid of the rancor and put the whole relationship back on a candid, open and honest basis." Even these limited goals will tax Carter's formidable skill as face-to-face negotiator and healer of hurt feelings, for the Mexicans believe, with considerable reason, that the U.S. has long treated them with a combination of arrogance alternating with indifference. "Poor Mexico," an old saying goes, "so distant from God, so close to the United States."

The historical roots of this resentment date to the Texas War of 1836 and the Mexican-American War of 1846-48, in which the U.S. forced Mexico to cede all its territory north of the Rio Grande. Then, early in this century, Americans' investments gained considerable control over the Mexican economy. Today, Mexico sells to the U.S. two-thirds of its $5 billion in annual exports. From its northern neighbor, Mexico obtains 72% of its $6.4 billion in foreign capital investment and many of its consumer goods. From the north, too, come the tourists, 3.7 million of them, spending about $1 billion a year. Tourism is Mexico's biggest employer, but to many Mexicans, crowds of tourists with their cameras, sunglasses and bikinis are only another symbol of their own subservient status.

The special relationship with the U.S. has enabled Mexico to achieve one of the fastest growing economies in the Third World; its gross national product after several very bad years, is once again increasing by about 6% a year. But the majority of Mexicans live in bleak poverty; per capita income was $1,070 a year in 1974, one-sixth of what it was in the U.S. Moreover, Mexico has one of the world's highest unemployment rates, up to half of its work force by some estimates.

Because of Mexico's alarming birth rate, its population grows by 3.2% a year. It has more than doubled, to 65 million, in less than a generation. By the year 2000, Mexico is expected to have more than 100 million citizens. The danger for the U.S. is that the giant on its southern border will explode in social upheaval. Most of the unemployed Mexicans are landless peasants, and they face a cruel choice: scratch out a bare living at home, migrate to urban slums or sneak across the border for low-paying jobs in the U.S.

Unexpectedly, there is at last the prospect of a solution. It is based on the huge underground sea of oil and gas that stretches north along the Gulf Coast from the swampy, humid jungle of Chiapas. Oil is now being pumped at a rate of 1.5 million bbl. per day. The annual income ($8 billion by 1980) is being used to expand Mexico's petrochemical plants and to build up Mexico's other industries. Over the short term, however, Mexico's plans for economic development will require exporting more textiles and other manufactured products--and unemployed workers--to the U.S.

Progress seemed close at hand when Carter took office and pointedly made Lopez Portillo his first state visitor. The U.S. President welcomed the meeting as an opportunity "to correct some of the long-standing economic problems of our two nations." Instead, under pressure from labor unions to stem illegal immigration, Carter and Congress beefed up border patrols and made employers of illegal aliens subject to fines. The U.S. urged Mexico to crack down on drug smuggling, but then became dismayed when young Americans ended up in Mexican jails.

Worse, and more fundamental, was the Administration's handling of Mexico's plans to obtain $2 billion a year in foreign exchange by exporting natural gas to the U.S. from the Reforma petroleum field near Cactus. Negotiations with six U.S. companies were almost complete and a 900-mile, $1.5 billion pipeline was under construction when Schlesinger abruptly vetoed the deal because Mexico's price of $2.60 per 1,000 cu. ft. was higher than the $2.16 being charged by Canadian suppliers. Lopez Portillo vowed to burn off the gas and leave the oil in the ground rather than sell it to the U.S. The pipeline was rerouted to the industrial city of Monterrey, and as a further gesture of defiance, the Mexicans decided to inaugurate the "gasduct" on March 18, the 41st anniversary of Mexico's nationalization of its oil fields.

The U.S. is, of course, the natural customer for Mexican oil and gas, and Lopez Portillo knows that, but the issue is now tangled with national pride. In Mexico City last week, leftists were urging Lopez Portillo not to back down during his talks with Carter. Advised Gaston Garcia Cantu in the magazine iSiempre!: "The saddest destiny awaits those on whom the Americans bestow the dubious title 'Mister Amigo.' " Several thousand students demonstrated in Independence Plaza, carrying anti-Carter placards and chanting "iFuera

Carter!" (Carter out). Even moderate Mexicans believe that overly rapid development of the oil fields would lead to inflation, corruption, and waste of a precious natural resource.

In Washington last week, aides were giving Carter conflicting advice on how to handle the talks. The debate created an unusual amount of confusion. A delegation from the Mexican Foreign Ministry that was preparing for Carter's trip visited the State Department, the Immigration and Naturalization Service and the Department of Energy. Wherever the officials went, they got a different reading on Carter's intentions. They reported home that the U.S. "apparently has no clear or positive policy ready, either for Mexico or the rest of Spanish-speaking America." Indeed, some aides thought Carter's final decisions on several major matters might actually have to be made during the 4 1/2-hour flight to Mexico City. Nonetheless, the broad outlines of what he will seek are known:

> A promise to keep the U.S. as Mexico's No. 1 foreign customer (the U.S. now buys 85% of Mexico's oil exports). Schlesinger estimates that by 1985 Mexican wells will be able to match Iran's pre-crisis output of 6 million bbl. per day. The CIA is even more bullish. Its experts forecast that in ten years, Mexico could pump 10 million bbl. per day, which is slightly more than Saudi Arabia's current production. But Lopez Portillo probably will not budge on Mexico's plans to increase production more slowly, to 2.25 million bbl. per day by 1980, including 1.1 million bbl. for-export. (Present U.S. oil consumption per day is 18.7 million bbl.)

> Resumption of negotiations on the sale of natural gas to the U.S. Lopez Portillo has already indicated to Ambassador Lucey that he wants to strike a bargain on gas if a way can be found without inflaming his political opposition. For the moment, however, Carter is expected to propose only a gentleman's agreement that Mexico promise to begin selling gas to the U.S. when demand outstrips domestic supplies, perhaps within a decade. The price would be negotiated in the future.

According to Mexican officials, Lopez Portillo will tell Carter that he is willing to bargain on oil and gas, but only if the U.S. is willing to negotiate on two issues that matter most to Mexico:

> Liberalized immigration laws. Mexicans argue, with substantial statistical evidence, that most illegal aliens from Mexico take low-paying jobs that are refused by U.S. workers, and they seldom settle permanently in the U.S. Further, Mexican authorities have long regarded illegal emigration as a social safety valve. But Carter is under pressure by labor leaders to strengthen immigration restrictions. At most he is expected to show a willingness to listen to the Mexican viewpoint and possibly modify somewhat the proposals on immigration that he will send to Congress this year.

> Lowered U.S. barriers to Mexican agricultural products and manufactured goods. Mexico already is the fourth largest U.S. trading partner and wants to sell even more to the north. U.S. restrictions on winter vegetables, which fluctuate according to domestic harvests, are a particular sore point. But any changes in U.S. trade policies would be opposed by U.S. unions and, in the case of winter vegetables, by farmers in California and the South. Moreover, U.S. businessmen would demand that Mexico reciprocate by lowering its trade barriers.

There are other topics on the Mexico City agenda: smuggling, fishing rights, narcotics and Carter's staple, human rights. But the President's three days in Mexico City will be basically an exercise in emotional diplomacy. After months ol frustration over SALT, Iran and other foreign policy problems --including the last-ditch meeting of Egyptian and Israeli Foreign Ministers to be held at Camp David on Feb. 20--the President looks on Mexico as an area in which he can make headway. In fact his low-keyed, unimperial presidency may be exactly what is needed. As a top White House adviser said: "It's the one damn place where the U.S. may actually do something."

This file is automatically generated by a robot program, so viewer discretion is required.