Panel: Revise Payments on Mexican Debt : U.S., Neighbor Urged to Alter Economic Policy

MEXICO CITY — The U.S. government should urge international lenders to restructure Mexico’s payments on its $102-billion foreign debt and to peg them to the country’s economic growth, a commission of American and Mexican policy experts has said after a two-year study of bilateral relations. The report, timed to coincide with new administrations in both countries, warns that the debt issue threatens to undermine U.S.-Mexico relations and recommends that the two countries form a cabinet-level binational commission to address economic policy.

“We must renounce unilateralism once and for all,” said William D. Rogers, assistant secretary of state for Latin American affairs in the Ford Administration and a member of the commission. “The day when our two nations can go their own way has come to an end.”

The 18-member commission, funded by the Ford Foundation, presented its report to President-elect Carlos Salinas de Gortari on Tuesday and is expected to give it to President-elect George Bush this week. Rogers said Salinas told the group that he plans to use the study to set the agenda for a meeting with Bush, which is expected to be held in the next few weeks.

Other members of the panel included former Defense Secretary Robert S. McNamara, San Antonio Mayor Henry Cisneros, Los Angeles lawyer Yvonne Brathwaite Burke and Mexican novelist Carlos Fuentes.

The report identifies five problem areas in U.S.-Mexico relations--drugs, immigration, foreign policy, education and culture, and economics. Among its findings:

The U.S. government should acknowledge that demand for illegal drugs in the United States is “the driving force” for drug production and traffic in Mexico; the Mexican government, meanwhile, should focus its enforcement efforts on large-scale traffickers rather than on peasant producers.

The U.S. government should extend the eligibility and application periods for amnesty for illegal Mexican immigrants, while Mexico should stimulate employment in the major “sender” areas of the country.

Presidential summits between the two countries should become more substantial, and other top-level officials should meet more regularly.

Both countries should agree to generalized trade concessions and reach free-trade agreements by sector. The Mexican government should outline an “open and consistent” policy on foreign investment.

Debt, however, was the issue that the report identified as most potentially destructive to U.S.-Mexican relations. To recover economically and absorb new workers into the labor force, Mexico’s economy needs to grow at 6% annually, the report said.

“Mexico’s debt level and debt service burden are simply too high in relation to the size of the economy and the growth of export earnings,” the report said. “Debt service obligations in the future should be designed subject to their capacity to pay under conditions of growth. . . . Without growth, resources for debt service will not be available.”

According to the report, Mexico’s debt amounts to about 70% of its gross national product, and annual interest payments are 6% of gross domestic product.