135. Memorandum From the President’s Assistant for National Security Affairs (Brzezinski) to President Carter1
- U.S.-Mexican Relations
The consultative mechanism established by you and President Lopez Portillo in February has been slow in getting started and slower in exchanging ideas with the Mexicans. Indeed, the mechanism has been almost completely dominated by a single issue—the undocumented workers’ problem—which you raised for reasons other than having to do with U.S.-Mexican relations.
After last year’s financial crisis brought on by excessive government spending and the attendant high rates of inflation, Mexico has reached [Page 298] agreement with the IMF on a stabilization program. Mexico has succeeded in holding wage increases to below 10 percent and inflation to roughly 15 percent. The major problem is that the program has caused increases in unemployment, on top of the high levels which existed before the program was instituted. Moreover, investment has been slow to pick up because of a continued lack of economic confidence and borrowing ceilings required by the stabilization program. Low investment and tight fiscal and monetary policies mean a decline in jobs. Growing population pressure on the rural and urban areas makes this decline a potentially volatile political situation. The U.S. immigration policy—which the Mexicans expect will result in the return of some workers and denial of access to new ones—is seen as seriously worsening the problem. Without the investment to create jobs in Mexico, or the ability of workers to seek jobs in the U.S., Mexico is worried that the problem of unemployment will reach crisis proportions.
Treasury is developing a proposal for a U.S.-Mexican Development Fund, designed to create employment in the rural areas of Mexico.2 It sounds like it might be a good approach to a very difficult problem. We will report to you when the outline of the plan is completed, which should be next week.
- Source: Carter Library, National Security Affairs, Staff Material, North/South, Pastor, Country, Box 28, Mexico, 8–9/77. Confidential. Sent for information. Brzezinski wrote below the subject line, “This is an update, in case you chat with Minister Roel. Carter underlined “Minister Roel” and wrote, “No.” Reference is presumably to a possible meeting during the Panama Canal Treaties signing ceremonies in Washington.↩
- In telegram 14900 from Mexico City, September 6, the Embassy stated the best way to spur Mexican rural development and address the problem of undocumented immigration was to build industrial plants in the interior of Mexico, which would prevent “drawing job seekers to the frontier.” (National Archives, RG 59, Central Foreign Policy File, D770322–1004) In late September, Senator Lloyd Bentsen (D–TX) proposed a plan to create a joint U.S.-Mexican development fund that would finance job opportunities in regions of Mexico where undocumented workers originated. President Carter, however, had not yet proposed the plan to the Government of Mexico (Telegram 16467 from Mexico City, October 3; National Archives, RG 59, Central Foreign Policy File, D770360–0269)↩
- Carter checked the approve option but wrote in the margin, “I’m not meeting w/Mexico.”↩