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U.S. DEPARTMENT OF STATE
OFFICE OF THE SPOKESMAN
JANUARY 25, 1995
SECRETARY OF STATE CHRISTOPHER
STATEMENT BEFORE THE
HOUSE COMMITTEE ON
BANKING, FINANCE AND URBAN AFFAIRS
January 25, 1995
Thank you, Mr. Chairman. I welcome this opportunity to join
Secretary Rubin and Chairman Greenspan in supporting urgent
congressional approval of the U.S. government's proposed loan
guarantee package for Mexico.
As you know, it is somewhat rare for me to appear before this
committee. But I consider my appearance here this morning to be
a direct exercise of my responsibility as the President's
principal foreign policy adviser. The plain fact is that the
United States has a fundamental national interest in making sure
that financial confidence in Mexico is restored.
Our immediate aim is to help Mexico overcome its short- term
liquidity crisis so it can turn its attention back to economic
reform and growth. But the package is about far more than
Mexico's economic future. It is about American leadership, in
this hemisphere and beyond. It is about American jobs, the
security of our borders, and the future of trade and economic
cooperation in our hemisphere. Most fundamentally, it is about
stability in a nation in which the United States has a vital
strategic stake as our close neighbor, and a vast economic
interest as our third largest trading partner.
Today I want to highlight the fundamental foreign policy and
national security interests that are served by acting now.
First and foremost, America has an immense economic and
political stake in Mexico's stability. If we support Mexico by
providing this loan guarantee package, President Zedillo will be
better able to implement his plan to keep Mexico on the path of
steady economic growth and reform and to regain investor
confidence. If we fail to act decisively now, American
investment to Mexico will be imperiled. American exports -- now
$40 billion a year -- will diminish. And many of the 700,000
American jobs those exports support could be jeopardized.
By helping Mexico restore financial liquidity and investor
confidence, the package will enhance its government's ability to
control inflation and to sustain the growth necessary for
stability and reform. Without our support, Mexico could be
hobbled economically. Its society could come under increasing
strain. Its progress toward reform could be stifled and even
reversed.
In the short term, economic distress and political instability
in Mexico could add to the pressure that already pushes
thousands of illegal immigrants across the 2,000-mile border
that we share. A Mexican financial crisis could cause
additional social, economic and law enforcement problems along
our entire southern border. Indeed, our determined efforts to
control illegal immigration could be overwhelmed.
Moreover, Mexico's capacity to cooperate with us on a range of
other issues -- from narcotics trafficking and money laundering
to the environment -- could be severely strained. Over the long
term, such instability would drain American resources and
undermine our ability to cooperate with all our neighbors to
meet these threats.
Second, approval of this loan guarantee package will have far-
reaching implications for the prosperity and stability of Latin
America and of emerging market economies around the world.
Already, reverberations from the peso devaluation have been felt
in many countries where sound market reforms have been rewarded
by accelerated economic growth and increased foreign investment
-- and where American firms have gained new opportunities.
Mexico's crisis, if left unaddressed, can disrupt other emerging
economies at similar stages of development. It is essential
that Mexico's crisis be ended so that the remarkable progress
toward open trade and investment in this hemisphere and beyond
is sustained.
Third and perhaps most important, this is a test of American
leadership. By extending this package to Mexico, the United
States will demonstrate its unwavering commitment to lead this
hemisphere toward stability and prosperity -- a commitment we
reaffirmed at the Summit of the Americas six weeks ago. Only
the United States has the capacity to offer this leadership.
Mr. Chairman, over the past decade we have witnessed a
remarkable transformation of this hemisphere. Where once
country after country stagnated under military rule, today we
are a hemisphere of 34 democracies. Where once economy after
economy was caught in the grip of closed markets, choking debt
and hyperinflation, today this is the second fastest growing
region in the world and the fastest growing regional market for
American exports. It would be an historic miscalculation to
stand aside and watch that progress falter in a nation of 90
million people across our border.
The triumph of democracy and open markets in our hemisphere is
certainly reflected in Mexico's experience over the last few
years. Let us not forget that the Mexico of today is not the
Mexico of the early Eighties. A decade ago the response to a
similar crisis in Mexico might have been very different: a
return to statist policies, nationalization of key sectors, the
imposition of trade barriers to American products.
Mexico has embarked on an historic process of democratic and
market reform that President Zedillo is committed to extend. It
is essential that this delicate process not be damaged or
reversed by economic and social instability.
Like many members of Congress, the Clinton Administration has
both immense hopes and serious concerns about Mexico that go
well beyond the specific issues involved in this crisis. Mexico
has many complex problems that will not be solved immediately.
Its current liquidity crisis, however, must be solved
immediately. If it is not, we will have little hope of helping
Mexico to continue meeting the long-term challenge of
modernizing its economy, strengthening its democracy, and
addressing the environmental, labor and immigration issues that
affect both of our nations.
We must resist the temptation to load up the loan guarantee
package with conditions unrelated to the urgent matter at hand.
By encumbering a package vital to the health of the Mexican
economy, such conditions could undermine their own intended goal
of encouraging further reform in Mexico.
As former President Bush urged last week, this measure "should
be considered in the Congress on its financial merits. The
Congress should not attach extraneous political considerations
to this legislation." President Clinton is determined to work
with members of both parties to keep this measure focused on
solving this crisis now.
Mr. Chairman, my fundamental responsibility is to help the
President safeguard the national security and vital interests of
the United States. But in addition, I have been an observer of
American politics, and I know that for many members of both
parties, this will be a difficult vote.
I also know that at every moment in our national life when
America's vital interests have been at stake, Congress has put
aside partisan differences and put national security first. As
Secretary of State, I ask you to do that again. For in this
case, our interests are crystal clear. If Mexico's liquidity
crisis is allowed to undermine its stability, America's security
and prosperity will be put at risk.
That is why it is imperative that we do the right thing -- and
that we do it right away.
Thank you very much.
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