Foreign Relations of the United States, 1969–1976, Volume E–11, Part 1, Documents on Mexico; Central America; and the Caribbean, 1973–1976

104. Memorandum of Conversation¹

Washington, September 24, 1976, 2:58–4:10 p.m.

PARTICIPANTS

• President Ford
• Jose Lopez Portillo, President-Elect of Mexico
• Charles W. Robinson, Acting Secretary of State
• Brent Scowcroft, Assistant to the President for National Security Affairs
• Amb. Jose Juan de Olliqui, Mexican Ambassador
• Amb. John J. Jova, U.S. Ambassador to Mexico
• Anthony Hervas, OPR/LS (Interpreter)
• Enrique Loaeza (Interpreter)

Lopez: Aren’t you feeling tired?

The President: It’s a let down, a bit. I spoke before a Polish-American group; I went to an Italian market. So that was a lift. I am looking forward to tonight.

Lopez: I was very pleased at the opportunity to meet with you and introduce my family.

The President: My son Jack will join us.

Let me congratulate you on your election. I look forward to working with you in the months and years ahead. I know we can build on our good bilateral relations.

Lopez: That is what I expect and hope, especially when Mexico is entering a period of turbulence. There is a sense of fortune in the people. We have to build a sense of hope and trust. It will take much work and the main element is the United States. Much of our economic problems stem from the U.S. economy. You are our most important customer and any change is of great consequence to us.

Fortunately, we have made economic arrangements with you and the IMF to carry us over this difficult period.

The President: We are very pleased to be of assistance.

Lopez: Your help has already had its favorable impact. The rest is up to us. But there is one thing. Our trade balance with the United States is very unfavorable. It is accidental, but it is legitimate on our side to seek to restore the balance. We think there are remedies. We have had conversations with the Secretaries of Agriculture and Commerce, and the Congress.

Let me give an example. We could organize an agriculture committee of both countries in areas where it makes sense. This would mean dividing the market equitably, and it would avoid labor migration to the United States. Strawberry cultivation is an example. It is labor-intensive and we have excess labor. If we divided it up, we could grow them in Mexico and our workers wouldn’t have to come into the United States. We know that is one of the most serious problems between us. That wouldn’t solve the problem, but it could relieve it.

The President: By the way, are you shipping any new oil into the United States?

Lopez: As I remember, some goes to the U.S. and some to Israel. We don’t sell to Central America because of an agreement with Venezuela. We sell a little to Brazil. We have an open market and we sell to who ever wants it.

The President: Is your production up?

Lopez: Yes, until 1973 we had to import crude oil. We had the bad policy of subsidizing energy, so our investment was low. I turned this around and in 1974 we were self-sufficient and in 1975 we started to export. We are self-sufficient in oil, but even though I am President I can’t really find out how much. There are old hands in Pemex who think the oil should stay in the ground for the future. I will straighten it out, and I will have someone at my side to give me the information the old hands and technicians want to keep from me.

I understand we have 6–7 billion barrels, and with secondary recovery there would be much more—maybe 11–12 billion barrels of proven reserves. For unproven reserves, the information is more general—probably 50–100 billion barrels. It is hard to make a policy without the information. It is essential to outline our export policy and refining capability.

The President: It should help your foreign earnings.

Lopez: Most of our exports are raw materials. That is why I am emphasizing the countryside and energy. We are also prospecting for mining. We have found lots of minerals. All this has to be developed if we can find the financing.

Let me describe a trap in our financing. Our trade deterioration was obvious recently. One of the ways to increase exports was oil, but we couldn’t increase production because the import of materials overloaded the economy. We have to reorganize our economy between prices, wages, production, exports, imports, taxes, expenditures, etc. It is like squaring the circle.

There are already 63 million Mexicans; when I leave there will be 70 million.

[Described how optimum a six-year term is.]

[Some discussion about campaigning.]

The President: Are there any particular problems we should discuss?

Lopez: Yes, I think the terms of trade is the most serious, but there are others.

One is non-documented workers whose situation and treatment in the United States worries us very much. Their non-legal status hurts them because they can’t be a contractual situation. We would like to avoid this problem, but when it arises, we would like to adhere to the migratory principles of the ILO. That, of course, has its own sanctions. These people have no empathy for the U.S. and the U.S. has none for them. I know the solution is job creation in Mexico.

The President: As I recall, we used to have an agreement for Mexicans to come to the U.S. under contract. I thought that was a good program. There were controls, but they had guaranteed wages and conditions. Unfortunately, the Congress ended that program under pressure and the problem is bad now. Echeverria and I discussed the prospect of the study maybe to revive that program. I generally favor that approach, though I don’t know where the study is.

Lopez: Unfortunately, stop-gaps like that don’t eliminate the problem. It helps, but there is always a black market problem. Some of your farmers demand cheap labor. There is plenty in Mexico and there is the problem.

The only real solution to this, and other problems—like drugs—is jobs in Mexico. That in turn is a matter of markets—supply and demand. I visited during my campaign the Province that is most involved in drugs. Now many of the people there are addicts. What used to be an economic problem has now become a social problem. As we eradicate the traffic, the price rises and the traffic is more lucrative.

The President: We have had wonderful cooperation, and I hope it will continue.

Lopez: To the extent we solve the drug problem, we create another—American prisoners in our jails, almost all of them because of drugs.

The President: How about the idea of exchanging prisoners?

Lopez: There are some problems, including the constitutional ones, but they will be overcome. I think we can solve the problem to whatever degree you wish.

Robinson: [Explains where the negotiations are.] We have no interest in having American prisoners and Mexico has no interest in having them.

Lopez: I would be happy to solve this if it hasn’t been solved by December.

Then there is the problem of border industries. If you could do something about the amount of gifts which can be brought in.

The President: But that is set by law.

Lopez: But it had been $200 until 1966 and then it went to $100.

The President: And $100 then would buy more than $200 now.

Lopez: Of course, I hope you can do something; that will help me a lot.

Also you could let our export agriculture have better entry.

[More discussion.]

The President: I hope your people will talk to State and Agriculture to do something about it.

What percentage of your exports go to the United States?

Lopez: Between 65 and 70%.

The President: Have they been going up or going down?

Lopez: Down just an insignificant amount.

Without being rhetorical, I think my administration will lay down the basis for the 21st century. If I fail, the country will fail and the country will go the Left, then to the Right, and democracy will fail.

The President: We certainly want democracy in Mexico. We will certainly do everything we can to help. You take over on December 1st?

Lopez: Yes. I am now preparing my government plan. I thank you a great deal for your expressions of support. In Latin America, there are different methods. We seek justice through liberty. Cuba eliminated liberty to seek justice. Uruguay seeks justice then liberty with order. Right now there are only four democratic-elected Presidents in Latin America.

I know you are very busy, but I want to thank you. I hope it is not our last contact and our hopes are with you.

The President: I look forward to having a state dinner soon for you, with me as the host.

1. Summary: President Ford and Mexican President-Elect López Portillo discussed bilateral issues, including drug control, migrant labor, and a possible agreement on the transfer of prisoners.

   Source: Ford Library, National Security Adviser, NSC Latin American Affairs Staff Files, 1974–1977, General Subject Files, Box 15, Visit—September 24, 1976—President-Elect López Portillo of Mexico 3. Secret; Nodis. All brackets are in the original. The meeting was held in the Oval Office. A September 10 biographical note on López Portillo observed that he believed “that closer bilateral relations with the United States are essential to the success of his economic programs.” (Ibid., Presidential Country Files for Latin America, 1974–1977, Box 5, Mexico—López Portillo Visit 1) In a September 22 memorandum, INR described López Portillo as wanting “U.S. understanding and help, and he will likely be friendly, frank, and forthcoming.” (National Archives, RG 59, Central Foreign Policy File, P770114–0521) Briefing papers on the López Portillo visit sent by Scowcroft to Ford noted that López Portillo viewed the visit “as an opportunity to strengthen bilateral relations which he may fear have been bruised by the style and some of the international policies of outgoing President Echeverría.” (Ford Library, National Security Adviser, Presidential Country Files for Latin America, 1974–1977, Box 5, Mexico—López Portillo Visit 3)