476. Memorandum From the Under Secretary of State (Irwin) to the Assistant Secretary of State for Inter-American Affairs (Meyer), Washington, April 26, 1972.1 2

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THE UNDER SECRETARY OF STATE
WASHINGTON

TO: ARA - Mr. Meyer
THROUGH: S/S
SUBJECT: PARA Review - MEXICO

Pursuant to the review of April 26, 1972, which was chaired by the Counselor, following is a summary of our conclusions with respect to US policy toward Mexico for the FY 72–73 review period.

I. Action Items

1. In preparation for the state visit of President Echeverria on June 15:

--The Department and the Embassy should continue to seek President Echeverria’s early acceptance of a mutually satisfactory interim agreement regarding the quality and quantity of water delivered under the 1944 Water Treaty.

--S/NM and ARA should marshal support for a $1–2 million US grant aid package of equipment and training to improve the Mexican Government’s capabilities to combat narcotics traffic.

2. ARA and S/NM should consult with the Embassy to determine the need for, and advantages of, establishing a full-time narcotics officer position in Mexico City.

3. The Department should continue to engage in tripartite talks with Mexico and Canada on narcotics controls and seek other opportunities for such talks on matters of common interest or concern.

4. Sometime after President Echeverria’s state visit, and dependent to some degree on its outcome, the Secretary [Page 2] should seek an early opportunity to make a major address on US-Mexican relations. Los Angeles, San Diego, San Antonio, or Chicago would be appropriate cities for such a speech.

II. Policy Program Guidance

A. Overall Policy Posture

The US should accord Mexico the top-priority attention it deserves. We should also seek to demonstrate to the Mexicans that we consider Mexico to be of utmost importance to us. To this end, the review recommended as action items that the Department engage in tripartite talks with Mexico and Canada (action item 3) and that the Secretary make a major address on US-Mexican relations (action item 4). The US should also continue the frequent Presidential visits and expand consultations of senior officials.

Mexico’s importance to the US is often overlooked by the government and public. Apart from the obvious interest we have in a friendly, cooperative and moderate neighbor to the south of us, Mexico is our fifth most important trading partner (in 1971 US exports to Mexico reached $1.62 billion, while imports from Mexico totaled $1.26 million), direct US investment in Mexico totals about $2 billion, and more Americans visit Mexico or reside in Mexico than any other country. The large number of Mexican-Americans, and their interest in Mexico, adds an important domestic dimension to our relations.

US-Mexican relations are generally good. There are several problem areas, such as the salinity of the Colorado River and illegal immigration, which if not addressed could damage relations, but they appear to be susceptible to improvement if not solution if handled carefully. President Echeverria and his government want to have good relations and have avoided strident criticism of the US, which characterizes so many of the other Latin American countries.

By virtue of the mature relationship between our two countries, we are not diffident in pressing positions in [Page 3] furtherance of US interests in Mexico. Problems are discussed candidly when they arise. We must be careful, however, not to take this relationship for granted. We must also be alert to the impact our actions are having cumulatively in Mexico. Although the Mexicans are self-confident and independent, they are nonetheless sensitive to the power and economic disparity between the two countries and suspicious that we may once again become insensitive to their interests or that we will no longer consult them before taking actions affecting them.

B. Water Policy

The US should continue to give priority attention to reaching both an interim agreement regarding the quality and quantity of water delivered under the 1944 Water Treaty and a definitive solution to the problem. In order to avoid arbitration or other form of third-party settlement, the interim agreement will probably have to provide for the delivery to Mexico of less saline water than has been delivered over the past few years. The Department should seek to obtain the concurrence of the Colorado Water Basin states and the Department of Interior in such a proposal. To demonstrate to Mexico our determination to find a permanent solution to the problem, the Department should urge the Department of Interior to site its prototype reverse osmosis plant (if approved by Congress) in the Welton-Mohawk District.

The review noted the Legal Office’s opinion that if the matter of US compliance with the 1944 Water Treaty were to be adjudicated, the adjudicators would probably rule that Mexico is entitled to significantly less saline water and the US might be required to pay damages. Because sentiment in Mexico for adjudication is growing, there is urgency in pressing for an interim agreement that would give us time to devise and negotiate a definitive solution.

C. Trade

The Department should try to schedule more bilateral trade consultations so that trade problems do not fester. [Page 4] If trade problems backlog, there is a danger that Mexico would apply protective countermeasures or that US domestic pressure for tougher trade action against Mexico would grow.

Trade differences--essentially over quotas, tariffs and non-tariff regulations--are not as yet a major problem, but they are an irritant and they may get worse. The development in Mexico of agricultural production aimed at the US market, and our attempts to restrict or control produce imports into the US, provoke some of the more troublesome problems. The establishment of US processing subsidiaries across the border to take advantage of lower wage rates has also prompted the AFL/CIO to seek repeal of the US tariff items under which the bulk of this trade is conducted. Mexico, in turn, has been seeking trade advantages from us so as to narrow its trade gap with the US.

D. Narcotics Control

In addition to seeking support for a US grant aid package of equipment and training to improve the GOM’s capability to combat narcotics traffic (action item 1) and the possible assignment of a full-time FSO narcotics officer to Mexico City (action item 2), the Department and Embassy should assess the effectiveness of BNDD, Customs and CIA anti-narcotics activities in Mexico and their impact on US-Mexican relations to determine if changes should be made in their activities or if limits should be imposed on the number of their personnel.

The review concluded that if opium production is curtailed in Turkey, Mexico is likely to become even more important as a supplier of heroin. In response, the US will probably wish to tighten US border controls and to step up our anti-narcotics activities in Mexico. In addition, the review agreed with the CASP that we should help the Mexican Government to improve its own anti-narcotics capabilities. Since the GOM is committed to narcotics control and has thus far used its equipment effectively, a $1–2 million aid package of equipment and training will further assist Mexico in meeting the narcotics challenge.

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The current efforts of BNDD, CIA and the Customs Department to augment their staffs overseas makes a review of their Mexican operations timely.

E. Illegal Immigration

The Department should continue to seek the amendment of the Immigration Law to make it a misdemeanor for a US employer to knowingly hire illegal aliens and the amendment of the Social Security laws or regulations to require proof of US citizenship or an immigration status permitting employment prior to the issuance of Social Security cards. We should, in cooperation with other agencies, explore other safeguards or penalties as well since it is not at all clear that these two proposals will be adopted.

Illegal immigration from Mexico has risen sharply since 1968, when numerical limitation was placed on immigration from the Western Hemisphere. The number of non-immigrants who enter the US legally but who obtain employment contrary to the law also seems to be increasing.

Because of its own unemployment problems, the Government of Mexico has given only lip service to controlling illegal entry into the US. More careful screening of non-immigrant applications has been of only marginal success. If we hope to restrict illegal entry and employment, there appears to be little alternative but to remove the incentive, i.e., the jobs.

F. Development Assistance

The Department and Embassy should keep a watchful eye on the outside development assistance flow to Mexico to ensure that it remains at a level which will enable the GOM to avoid serious debt-service problems. Since vast areas of Mexico remain underdeveloped, the US representative on the IDB should continue to support soft loans for Mexico; at the same time, he should support efforts to reduce Mexico’s share of soft loans from 45–22% so as to make more soft loans available for the poorer Latin American countries.

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The US representative should support IBRD and IDB efforts to encourage GOM policies that will contribute to more equitable distribution of income in Mexico. The Department should be ready to respond to Mexican initiatives to reduce the high (3.4%) annual population growth rate.

Although the US terminated bilateral aid to Mexico in 1966 because of the strength of Mexico’s economy, we believe Mexico should continue to receive substantial support from the IBRD and IDB. Despite its relatively high growth rate over the past decade, Mexican development has been uneven. An estimated 40% of the population has not greatly benefited from the economic development of the past 30 years.

Some younger and more progressive PRI leaders, as well as President Echeverria himself, are aware of the need for better income distribution, but the weight of PRI leadership is conservative. IBRD and IDB efforts to elicit more Mexican interest in balanced income distribution should be encouraged, although we (and the IBRD and IDB) should not try to impose reforms on the Mexican Government.

III. Resource Guidance

One of the purposes of the global PARA review of consular positions and workloads which is to be conducted this summer should be to determine if consular officers can be reallocated for assignment to Mexico. Until this review is completed, the Embassy should try to avoid eliminating or reducing service traditionally provided American citizens.

IV. The Outlook for Mexico

A. Domestic Stability

It was generally agreed that the outlook for Mexico over the next two or three years--or for the balance of the Echeverria administration--is for reasonable domestic stability and a relatively high economic growth rate. While the PRI is not as cohesive as it once was, it should have [Page 7] little difficulty containing the protest activities of the dissenters and the few small guerrilla groups.

Over the longer term, the task of governing Mexico will be much more difficult. An NIE on Mexico published in January 1970 (NIE 81–70, The Prospects for Mexico) concluded that “Mexican governments will be confronted by basic socio-economic problems which, if not resolved or substantially ameliorated, could cause serious disruption in the society. Unrest generated by inequalities in the distribution of the national income, corruption, and disaffection with the system generally has been increasing in recent years. The poverty of rural Mexicans will be particularly difficult to cope with as long as official policy concentrates scarce resources on industrialization and commercial agriculture.” The high birth rate, particularly among the urban and rural poor, only compounds the problem.

It is doubtful whether the Echeverria government or its successor will be able to meet fully the needs of its rapidly growing population or to forestall rising unrest. As dissatisfaction grows, particularly among the middle class, there is a danger that the government will tend to rely more heavily on its repressive powers, thereby contributing further to instability. There is also the possibility that the government may increasingly direct popular discontent against the US. There is little hope that the government will respond effectively to requests for greater political expression. While it would be too early to predict major unrest, the situation bears close watching.

B. Foreign Affairs

While Mexico will probably continue to pursue a more activist and “independent” foreign policy, the review saw no reason at this point to be alarmed by this development. However, if the Mexican Government becomes hard-pressed on domestic issues, there may be an increase in anti-US criticism and troublesome incidents in US-Mexican relations.

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Appropriate portions of this memorandum are intended as policy guidance for the Bureau of Inter-American Affairs.

Should ARA, in making its own best judgment on these matters, reach conclusions that depart substantially from this guidance, your Bureau is requested to bring these to the attention of S/PC for review.

John N. Irwin II

Attachment:
ANNEX A - Indicative Resource Guidance.

  1. Source: National Archives, RG 59, Central Files 1970–73, POL 1–1 MEX–US. Secret. Attached but not published at Annex A is “Indicative Resource Guidance.” In telegram 2281 from Mexico City, May 3, the Embassy reported that Rabasa listed as the 3 most important issues in United State-Mexican relations, “salinity, trade problems, and situation of Mexicans working illegally in U.S.” (Ibid., POL 7 MEX)
  2. Under Secretary Irwin provided Assistant Secretary Meyer with a summary of U.S. policy priorities in Mexico for the FY 72–73 period. Among the major focal points were the Colorado River salinity issue, bilateral trade differences, narcotics control, illegal immigration, and development assistance.