When President Clinton decided to loan Mexico $12.5 billion in 1994 to help the nation survive a financial crisis that threatened the collapse of its economy, he confronted angry opposition from both Republicans and many members of his own party. Neither Congress nor a sizable majority of Americans polled at the time approved of the president’s demand that the U.S. contribute additional funds to the $17 billion the International Monetary Fund agreed to provide to Mexico. Clinton, nevertheless, used his executive powers to draw money from a special Treasury fund, circumventing Congress and challenging public opinion.
The president’s resolve was vindicated earlier this month when Mexico repaid the loan three months ahead of schedule. The United States made a $500,000 million profit on the interest, and Mexico is now prioritizing economically responsible policies that are ultimately in our own nation’s financial interest.
There is no question that Clinton took a risk with the loan. The value of the peso declined so much in 1994 that Mexico was already defaulting on short-term debts it owed to private and government investors throughout the world. Mexico’s problems, however, were increasingly becoming U.S. concerns. Illegal immigration was on the rise, and Mexico’s capacity to partake in a mutually productive trade relationship with the United States was faltering. Mexico could not possibly have rebuilt its economy without U.S. economic support and the confidence extended to its government by the Clinton administration.
While Mexico has continued to make its share of mistakes, President Ernesto Zedillo has demonstrated that his administration takes the nation’s financial integrity seriously. Exports in Mexico are up and the exorbitant inflation rates responsible for diminishing its workers’ economic power are finally falling. Mexico’s ability to begin repaying the money it owes the IMF is further reinvigorating overseas investment in the nation.
Now, however, the Clinton administration must support Zedillo’s efforts to focus on improving the education and job opportunities available to Mexican citizens. The government belt-tightening Mexico has undergone over the last two years in striving to rebuild its economy and repay its loans has meant increased deprivation for many of its citizens. More than a million Mexicans lost their jobs after the 1994 crash, and thousands more lost homes and businesses. Additional reforms must seek to further open the nation’s developing capitalist market so that Mexico can create the jobs, products, services and wealth it will need to increase the nation’s standard of living. Clinton can help by insisting that our trading policies with Mexico do not undermine the economic power of Mexican workers.
Both Clinton and Zedillo deserve much of the credit for Mexico’s recovery. New investments have diversified Mexico’s economy, fueling social and legal changes aimed at facilitating economic growth and generating job opportunities for its workers. A prosperous, stable Mexico, in which economic resources are more evenly distributed, will mean a better life for its citizens. For the United States, Mexico’s economic revitalization has fostered trust and cooperation in shaping a mutually beneficial trade relationship.