[Congressional Record Volume 141, Number 35 (Friday, February 24, 1995)]
[Senate]
[Page S3080]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                        FINANCIAL AID TO MEXICO

  Mr. DOLE. Mr. President, when President Clinton announced a financial 
package to aid Mexico in its current economic crisis, Speaker Gingrich 
and I announced our support. Mexico was, and is, of vital importance to 
the United States. In my view, we could not stand by and watch Mexico 
financially melt down if there were any realistic chance to help.
  Earlier this week, an agreement was signed between the United States 
and Mexico, and its full details were released to the public. I have 
analyzed it, with the help of staff, outside advisers, and other 
Senators. I find it somewhat surprising and, at its core, 
disappointing. My message should not be misinterpreted--I do want 
United States efforts to assist Mexico to work. I hope we can help 
Mexico achieve the financial stability that they so desperately need. 
However, I must reluctantly point out the shortcomings of the agreement 
reached this week.
  In my view, the basic mistake Mexico made last year was allowing 
events to get to the point where the only apparent choice was to 
devalue the peso. Perhaps the Government believed that a little 
devaluation would be a good thing.
  Common sense should have recognized that Mexico's decision to break 
its promise to the Mexican people to keep the peso stable against the 
dollar would precipitate a breech of trust--a stampede to get out of 
pesos and into dollars.
  The Treasury Department needs to be very careful in the use of funds 
from the exchange stabilization fund. For example, I am not convinced 
that thrusting the United States into the middle of a Mexican banking 
crisis is prudent or necessary.
  The primary focus of the stabilization plan is not aimed at reversing 
the fundamental mistake of devaluation--not now and not over time. The 
measures described in the agreement to firm up the price of the peso 
seem almost an afterthought. They do not address the problem of 
extinguishing the excess pesos that have been coming off the Mexican 
printing presses, even as recently as last week. The heart of the 
problem is restoring confidence in Mexican pledges by moving toward 
restoring the value of Mexico's currency, and I hope it is not too 
late. I hope that administration officials will still focus on the main 
target: extinguishing pesos and restoring confidence in the Mexican 
currency. This should be the first priority, not raising interest 
rates.
  It appears my concerns are shared by the markets. When it was first 
announced that the United States would help Mexico, the Mexican stock 
market went up and the peso strengthened. Yet when the exact terms of 
the deal were made public, the peso weakened and the stock market 
resumed its slide.
  In the coming days and weeks, Congress will examine many issues in 
the Mexico situation--what advice the administration gave, when 
officials knew about the devaluation, allegations of conflict of 
interest, and other issues. I am also working with the administration 
to send a group of Senators to Mexico in the near future to get a 
firsthand assessment of the situation. A central part of that 
assessment will be looking at whether the administration's proposed 
medicine will cure the disease.


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