[Congressional Record Volume 141, Number 13 (Monday, January 23, 1995)]
[Senate]
[Pages S1298-S1299]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                       CONCERN OVER MEXICAN DEBT

  Mr. PRESSLER. Mr. President, I would like to rise to say a few words 
about the Mexican debt situation and about our relationship with 
Mexico. I have been very troubled that our leadership has agreed to 
support this loan guarantee package with Mexico without further 
analysis.
  There are two things that give me great trouble, and as a member of 
the Finance Committee I will be asking some very hard questions. First 
of all, why can we not get this package collateralized? Why can it not 
be attached either to the Mexican oil resources or to some other 
collateral, because I am afraid the American people may not get their 
money back.
  Many who are advocating this are going around saying it will not cost 
us anything. But I have been in this body since 1978, and the House 
since 1975, and I have heard this again and again, and the U.S. 
taxpayers frequently end up paying the bill.
  The second thing that troubles me a great deal is the Chile example. 
Economists tell me that the example of what happened in Chile in the 
early 1980's is almost perfectly analogous to what is happening in 
Mexico. For example, in Chile in the early 1980's they had a similar 
economic crisis where their money had been devalued and Chile was 
unable to get any assistance from the United States at that time 
because General Pinochet, the dictator, was not approved by the United 
States and the United States had cut off all aid and even economic 
relations with Chile so Chile had nowhere to turn.
  Under General Pinochet's leadership Chile made economic reforms. They 
tightened their belt, they went through the steps necessary to restore 
their economic health internally, and today Chile is one of the most 
prosperous and booming countries in the world. Indeed, Chile is 
emerging like one of the supereconomies that we have seen emerge in 
Asia. Chile is the first such supereconomy of South America. And Chile 
now seeks to join in a trade agreement with the United States. Its 
businesses are competing around the world.
  If we roll history back and imagine that in the early 1980's Chile 
had been a democracy and we had been giving aid to Chile, we would have 
given Chile a series of loan guarantees and aid and Chile would not 
have made the necessary economic reforms. And Chile would probably 
still be a struggling Third World country today.
  So I say the same is true with Mexico at this time, 1995. Mexico has 
not taken many of the strong measures necessary. I had great hopes for 
the last Salinas government. It seemed, as it got toward the end of 
that time, Mexico, and the PRC, in wanting to win the election, took 
softer and softer economic policies, devaluing, trying to create 
artificial wealth, printing money, and doing all the things they are 
not supposed to do in terms of sound economic decisions.
  Now should the American taxpayers be asked to pay for that? Once 
again we are in one of these circumstances where a lot of aid would be 
going to some of our large bond funds and banks in the United States. 
Mutual bond fund types who bought a lot of the Mexican paper would be 
bailed out. We would be bailing out a lot of our own mutual bond funds, 
banks and others.
  We are also bailing out the Mexican politicians who did not make the 
right decisions and the hard decisions, who did not tell their people 
the truth in their speeches as they went about Mexico. But the worst 
part of the whole thing is, aside from bailing out private groups who 
maybe do not deserve it, the worst of all is that we may well be 
delaying real reform in Mexico. Would it not be better to let 6 months 
or 1 year pass and observe that Mexico is taking some of those tough 
economic measures? Why do we have to act on this so quickly?
  I think Mexico should be required to make internal economic reforms 
and also to collateralize the loan guarantee. The Mexicans refuse to 
sell their publicly owned oil fields and oil industry, which was 
nationalized at one point. It is a socialistic endeavor and a very 
unhealthy one in terms of what it produces for Mexico. Here we are, a 
free-enterprise country, giving a noncollateralized guarantee to Mexico 
while not requiring them to sell their oil industry. The economists 
tell me if they were willing to privatize their oil industry, they 
could have far in excess of the billions of dollars they are seeking 
from the United States.
  So in closing I would like to say, let us call this what it is. It is 
a bailout. There are many arguments that are made--the specter of 
refugees coming across the border, et cetera, et cetera. But we are 
going to have the same problem again in 2 or 3 years unless Mexico 
makes the economic reforms that are necessary. Let us look at the Chile 
example, the example of a country that made the reforms, did not get 
any aid from anybody, and is one of the healthiest countries in the 
world today.
  In terms of foreign aid, I have observed over the years the countries 
that have developed the most economically in the world have been those 
that have not received economic aid from the United States--with one or 
two exceptions. All the tigers of the Far East did not receive aid 
packages from the United States. They did it themselves. Many of the 
countries that we have consistently given foreign aid to have faltered, 
have not made internal decisions, have expected a handout, and have 
remained very, very poor. So we have not done these poor people a 
favor. As Chile, when they needed help and they were looking for 
international grants and aid--nobody gave it to them. They have become 
the most prosperous country in South America as a result of it.
  So I think there is something to be learned here. I know it may sound 
harsh. Maybe it sounds cold and calculating. But if we really want to 
help people, sometimes we should require they make reforms before we 
give them aid, or we should try to give them trade rather than aid. 
Also, I point out the huge budgetary deficit we have in our own country 
and the number of people we have in need of some kind of small business 
assistance here within the United States.
  So, I have made it known to the leadership I was disappointed that 
both sides, both the President and Republican and Democratic 
leadership, endorsed this plan without further consulting and assessing 
the feelings of other Members of the Congress. As a member of the 
Finance Committee, I do not feel obligated to support this until I see 
much more collateralization, until I see much more performance on the 
part of the Mexicans in terms of getting their house in order, and 
until I see the American taxpayers reassured.
  Recently I have been in on some debates about privatizing public 
broadcasting in this country, and I have been criticized for things I 
have never said. I find that privatizing sounds bad to some people 
inside the beltway. The fact of the matter is, there are ways that 
public television can make a great deal of money through programming 
rights, through working with regional communications companies, and 
through working with other communications companies. In terms of 
marketing the product that they have, they can make a lot of money and 
they can save the taxpayers money. But in the whole debate the taxpayer 
is almost forgotten.
  So it is with the Mexican debt issue. Let us think about the 
taxpayers of this country as we consider the Mexican debt situation.
  Mr. President, I yield the floor and I suggest the absence of a 
quorum.
   [[Page S1299]] The PRESIDING OFFICER. Will the Senator withhold 
that?
  Mr. PRESSLER. Yes.
  

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