Mexico Business / September 1997
By Larry Luxner
WASHINGTON -- It seems Jesús Silva-Herzog has always been close to the center of power.
Born just a block from his country's most famous landmark -- the towering Angel of Independence monument along Mexico City's Reforma -- Silva-Herzog now occupies a spacious Pennsylvania Avenue office just three blocks from the White House. As Mexico's ambassador to the United States, the 62-year-old political appointee represents not just a thriving nation of 90 million people, but the most populous Spanish-speaking country in the world and one of Washington's top three trading partners.
As ambassador, he's the latest in a long line of distinguished diplomats beginning with José Manuel Zozaya Bermudez, who was named Mexico's first envoy to the United States back in 1822.
Silva-Herzog, whose desk sits in front of a gold-framed painting of 19th-century Mexican patriot Benito Juárez, has been in politics for over 40 years, having begun his career with the Partido Revolucionario Institucional (PRI) as an economist with Mexico's Central Bank in 1956. In 1982, the Yale graduate became secretary of the treasury, a job that lasted four years. He was later elected president of the Center for Latin American Monetary Studies in Mexico City and stayed there two years before moving to Madrid as Mexico's ambassador to Spain.
In late 1993, Silva-Herzog returned to head the Ministry of Tourism, a position he gave up in February 1995 to take his current job at the Mexican Embassy, which boasts 160 employees and an entire floor devoted to the North American Free Trade Agreement.
During an hour-long interview with Silva-Herzog in late July, we asked the ambassador about everything from drug-smuggling to NAFTA to his country's July 6 mid-term elections, in which both the left-leaning Partido Revolucionario Democratico (PRD) and the center-right Partido Acción Nacional (PAN) gained power at the expense of the long-entrenched PRI. Here are excerpts from that interview:
Q: What's it like to be Mexico's top representative in the United States?
A: I'm one of the busiest ambassadors in Washington. In two and a half years, I've never had a boring moment. Right now, we're dealing with a deportation case, we're in the middle of a tuna fight, we're being accused of dumping lemons, and we're having some violence on the border.
Q: How do you view bilateral relations in general?
A: I am convinced there are no other two countries in the world that have such a complex, intense and diversified relationship like the one between the United States and Mexico. The U.S. has a very intense trade relationship with Canada and Japan, a close relationship with the former Soviet Union because of security reasons, and with Israel because of its key importance in the political equilibrium in the Middle East. But there is no other country in the world where you have the type of relationship you have with Mexico.
We are today the third-largest trading partner of the United States, with 1996 bilateral trade hitting $140 billion. This year, we hope to become No. 2. We are going to displace Japan, with our bilateral trade amount to $160-170 billion.
Furthermore, Mexico has become one of the most important destinations for U.S. direct and financial investments. We have a 2,000-mile border with one million crossings every day. There is no other border in the world with one million crossings a day. In addition, Mexico hosts the largest number of Americans living outside the United States on a permanent basis.
Q: Do you see yourself in any way speaking on behalf of the Mexican-American community?
A: I wouldn't dare say that. Probably we have 20 million people, and according to most demographic studies, the Hispanic community is going to become the nation's largest minority group by the year 2010. The Mexican-American community is diverse. You must remember that we lost half of our territory in the last century. Mexico used to go all the way to Salt Lake City.
Q: Concerning immigration, are you worried about Washington's recent tightening of laws on political asylum and deportation of illegal aliens?
A: There's no question about it. The new law is already in effect, and of course we are very worried. It's a restrictive law that reflects anti-immigrant feelings that exist in this country over the last few years. We do not dispute the right of any country to defend its sovereignty and borders, but I think the law forgot to take into account the many specific types of immigrants. The Central Americans came to this country in many cases because of civil wars in which the U.S. was an interested party. They were given special status, and now they're at risk of being sent back.
Q: We understand that 500,000 Mexicans also face deportation. What is your embassy doing about it?
A: We are doing as much as we can. We are trying to convey to the U.S. authorities the consequences of an inflexible application of the law.
Q: Moving to politics, many observers have said the July 6 mid-term elections were the fairest in Mexico's history. Do you agree with that view?
A: It was a wonderful and beautiful exercise. More than 60% of the electorate went to the polls in a mid-term election, not a presidential election. In order to put this number in the proper context, you must remember that in the U.S. presidential election last November, only 45% of voters went to the polls. The election was peaceful, transparent and without any serious incidents, and with the people's conviction that they wanted to participate in Mexico's most important national decisions. More than 50% of Mexico's population at the local, state or federal level will now be governed by the opposition. Mexico has made a very important step forward in its road to improve the democratic process. I think you can say with a great deal of accuracy that today Mexico is a plural, open and a democratic society.
That of course didn't happen by accident. The Mexican people and the president took a number of steps in order to improve our electoral [system] and campaign finance process. The Mexican people have recovered a degree of confidence, and the same can be said about the outside world, which saw this election as a real example for other countries to follow.
Q: What kind of long-term effect, if any, will PRI's electoral losses have on the Mexican economy?
A: Right after the elections, the Mexican stock market hit an all-time high. We have had four consecutive days of record levels, then two days of adjustment, and now we're back up. That means essentially that the people have increased their confidence in the Mexican political system. The mayor of Mexico City or the [new PAN governors] will not have any responsibility in the design or implementation of economic policy. They'll have their say and they'll try to insist, but I don't have any doubt that the basic economic policy will continue, and that Mexico after the elections has added some degree of confidence on the part of the investment community.
Q: Turning to US-Mexican trade relations, what's your opinion of the Clinton administration's recent report praising NAFTA?
A: It was an objective, serious and realistic report. The basic message was that NAFTA has been positive for the U.S. economy, but with a modest impact. I agree completely with that conclusion. In Mexico, it has had a positive effect as well, because it permitted us to increase the dynamism of our export sector -- the most important source for our economic recovery. Without export expansion, the drop in Mexican economic activity after for the 1994 peso devaluation would have been much more serious.
Q: Do you think there's a chance of a PRD-led government scrapping NAFTA?
A: I don't see any risk of that happening. The position of the PRD with regard to NAFTA has been much more discreet than the one we hear in some quarters on Capitol Hill.
Q: What about critics like Ross Perot and the AFL-CIO, who charge that Mexico has gained hundreds of thousands of NAFTA-related manufacturing jobs at the expense of U.S. workers?
A: That is absolutely false. The level of unemployment in the U.S. economy today is under 5%, the lowest in 20 years. You have been creating about 250,000 jobs per month in the last five years. So where is that famous sucking sound?
Q: Yet even many Mexicans don't like NAFTA.
A: NAFTA has benefitted all those workers and businesspeople whose production is oriented toward the export market. Those industries oriented toward the domestic market have been [negatively] affected. In Mexico's case, it's a little difficult to measure the impact during the first three years, because it coincided with the worst crisis we had since 1932, so it's hard to say what negative impact is attributable to NAFTA and which to the crisis.
Q: On Jan. 1, 1994, the same day NAFTA took effect, the Zapatistas began their rebellion in Chiapas. Where do things stand now?
A: In the first 14 days there was a lot of fighting and shooting, but since then, there has not been a single bullet fired, and the Mexican government has been insisting in in a very stubborn way that we have to find a political solution to the conflict. We are making conflict, but very slowly.
Q: Earlier this year, President Clinton decertified Colombia for the second year in a row and certified Mexico, angering many lawmakers. Some Senators [Connecticut Democrat Christopher Dodd and Arizona Republican John McCain] think the whole certification procedure should be phased out. What do you think?
A: We have never agreed with the certification process. We Mexicans are somewhat mentally retarded. We do not understand why the most powerful country judges all the others, especially when it is the most important consumer of drugs in the world. We had one terrible incident [during the certification process], when the drug czar of Mexico was found to be linked to one of the drug cartels. Without that incident, we would have been certified without any doubt, because the degree of cooperation that we have achieved during 1996 was unprecedented.
Q: And yet people often view Mexico as synonymous with corruption and drug trafficking. What are you doing to erase this image?
A: There's no doubt we have had quite a number of corruption scandals in Mexico linked to drug trafficking. But the only way drug trafficking can move is through corruption, and that means there's a lot of corruption on this side of the border as well. How else can you explain drugs going from Mexico to San Diego, Minneapolis, Portland or to Fourteenth Street in Washington? Even the United States -- the most powerful, richest country in the world -- will not be able to deal with this corruption alone.
Today, there is a recognition like never before in the United States that we have to look very carefully at the demand side of the equation, not just the supply side. We are stopping the finger-pointing, and we're now in a much more constructive mood to cooperate.
Q: Has Mexico's close political and business ties with Cuba hurt its relations with the United States in any way?
A: The United States has understood very clearly that we have a different position. When you have a mature relationship, you are able to agree to disagree, and Mexico has taken that position since the early 60s. Mexico was the only country within the OAS that didn't break diplomatic relations with Cuba. We have always sustained the principle that no country has the right to impose any conditions on the other. We believe in respecting the domestic affairs of other countries.
Q: What do you think of President Clinton's choice of Massachusetts Gov. William Weld [who faces opposition from conservative Republicans angered by Weld's liberal views of marijuana] as the next U.S. ambassador to Mexico?
A: Gov. Weld would be a wonderful candidate. I know him very well. I think he's a great man.