[Congressional Record Volume 141, Number 21 (Thursday, February 2, 1995)]
[Senate]
[Pages S1971-S1972]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


                   THE CLINTON PLAN TO ASSIST MEXICO

  Mr. DODD. Mr. President, on Tuesday, January 31, President Clinton 
announced that he could no longer wait for the Congress to act on the 
Mexican loan guarantee legislation that he had proposed to assist 
Mexico with the serious economic crisis it confronts. Instead, he has 
decided to act now to stem the tide of negative expectations that 
threatens to overwhelm Mexican exchange and financial markets. 
Utilizing existing executive authority, the President has indicated 
that the United States will make available a $20 billion swap 
arrangement through the Exchange Stabilization Fund.
  The President, to his credit, has also enlisted the substantial 
involvement of the international community in this latest initiative. 
The International Monetary Fund will provide an unprecedented level of 
assistance--$17.5 billion, and the European Community through the Bank 
for International Settlements will make $10 billion available to this 
effort. Taken together, this package should be more than sufficient to 
deal with the adverse market psychology that had developed over the 
inability of Congress to act on the guarantee proposal.
  I believe that the President's decision is the right one in light of 
the potential threat that the current instability poses, not only for 
Mexico, but for our economy as well. It is important to remember that 
Mexico has been an important player in the United States economic 
picture. Mexico has been our third largest trading partner. The United 
States has represented two-thirds of Mexico's worldwide trading 
activities. Up until now, Mexico has been an important and growing 
market for United States exports--we sold nearly $50 billion of our 
products there in 1994. Some 770,000 American jobs depend on our trade 
with Mexico. U.S. investors also have a stake in the current situation. 
Not just large New York bankers and Wall Street investment brokers--but 
thousands of other Americans through their involvement in pension and 
mutual funds.
  Even my State of Connecticut, thousands of miles from Mexico's 
border, stands to reap the benefits of a vibrant Mexican economy, or 
alternatively suffer the pain of a collapsed one. In 1993 nearly 7,000 
Connecticut workers were employed in producing products destined for 
sale in Mexico at a value of $365 million. My State is by no means 
unique on this score. California, Texas, Arizona, New Mexico all have 
an enormous stake in Mexico's economic health.
  That Mexico has a serious problem is not in question. Its financial 
and currency markets have been in a frenzy over the last several weeks. 
The peso has lost more than 50 percent in value. Yesterday, the peso 
reached a historic low at 6.3 pesos to the dollar. The Mexican stock 
market has been rocked as well. The Zedillo government has been unable 
to refinance most of its debts
 coming due thus far this year--obligations that will reach $80 billion 
by year's end. Unless this crisis of confidence is reversed and markets 
stabilized, the Mexican economy will slide into serious recession and 
its financial system will all but collapse.

  Clearly, the Mexican Government must take steps to help itself. And 
it has done so. On January 3, President Zedillo announced an emergency 
economic program designed to stabilize the economy--allow the peso to 
float, reduce Government expenditures, accelerate Mexico's 
privatization program for state enterprises, conclude a wage-price 
accord with business and labor in order to contain inflation, and open 
the Mexican financial sector to foreign investment. Despite these 
efforts, the crisis of confidence continued.
  I for one am firmly convinced that President Clinton has made the 
right decision in proposing that the United States intervene in order 
to restore confidence in Mexico's economy. It makes good economic 
sense. It makes good foreign policy sense. The American people stand 
everything to gain from a stable and prosperous Mexico. And, much to 
lose from one that is in disorder and poor.
  If we sit back and do nothing, millions of Mexicans will lose their 
jobs. This will produce social and political tensions. It will also put 
additional pressure on our borders as Mexicans seek alternative sources 
of employment in the United States, further heightening tensions over 
immigration between the United States and Mexico.
  To those who point to NAFTA as an explanation for the current 
economic crisis facing Mexico, I would say that they could not be more 
wrong. If anything, it is because of NAFTA that there is a clear 
framework for resolving the current economic problems confronting 
Mexico. Many Americans currently doing business in Mexico have 
indicated that they intend to stay the course, to remain engaged, to 
ride 
[[Page S1972]] out the current fiscal storm. Why? Because they believe 
that the Mexican economy is fundamentally strong. A principle reason 
they hold that view is because NAFTA has ensured the continuity of 
fundamental market reforms that has made it possible for Americans to 
sell products and do business there. Were it not for NAFTA, the crisis 
in Mexico would be far deeper and far more protracted.
  I commend Majority Leader Bob Dole and Speaker Newt Gingrich for 
their willingness to act in a bipartisan fashion to assist the 
President in moving the original guarantee proposal through the 
Congress. Regrettably they were unable to garner the necessary 
bipartisan support required to pass the legislation in a timely 
fashion. I think that the President was right in the judgment that the 
Mexican economy could not withstand the battering of another several 
weeks of uncertainty over whether the United States assistance would be 
forthcoming.
  Mr. President, we engage in vigorous debate in this body day in and 
day out. Debate is clearly an integral part of the legislative process. 
However, from time to time, an issue comes before the Congress that is 
so important and so sensitive that it mandates that partisan politics 
be set aside and that we come together in support of the President. I 
believe that the situation in Mexico is just such an issue.
  Mexico and the United States have had a long and enduring friendship. 
We share a 2,000-mile common border. We share a common commitment to 
democracy, liberty, and human freedom. We are partners in a global 
economy that has inextricably linked our fates. For all of these 
reasons, United States' interests are served by helping Mexico at its 
moment of need. I call upon all my colleagues to get behind the 
President in support of this effort--it is in the interest of all 
Americans that this initiative succeed.


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