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Dividends at the border

Saving an infrastructure development bank could pay off for the U.S. and Mexico.

March 30, 2006|Jorge G. Castaneda | JORGE G. CASTANEDA is a former foreign minister of Mexico and a professor of politics and Latin American studies at New York University.

AFTER A three-year freeze, U.S.-Mexico relations are apparently improving again. Presidents Fox and Bush meet, probably for the last time as presidents, at a summit in Cancun today; the U.S. Senate Judiciary Committee approved an immigration reform bill that looks a lot like the whole enchilada, and Mexico seems to be finally acknowledging that violence on its side of the border is a legitimate source of concern for inhabitants on the American side.

Immigration is, of course, the key issue. The Senate and the Bush administration are at long last understanding what's needed for progress on immigration -- that there can be no effective temporary-worker program without cooperation from Mexico; that such cooperation is politically impossible unless reform includes access to the program for undocumented Mexicans already in the United States; and that there has to be an eventual, earned path to U.S. residency and citizenship for those included in the program, without requiring them to return to Mexico and to wait indefinitely.

Mexico, for its part, is now acknowledging more explicitly, as it did tacitly at the beginning of Vicente Fox's term, that it must step up to the plate and share responsibility for regulating flows across both of its borders -- north and south.

It must contemplate actions such as establishing checkpoints at the Isthmus of Tehuantepec in southern Mexico to dissuade transmigration from third countries; it must create incentives for male heads of households to remain in their home communities, for example by doubling welfare benefits and establishing high school scholarships for those who stay; and it must establish disincentives for leaving, such as the loss of ejido, or collective-land rights, after a long absence.

All of this leaves room for hope that before Fox departs office on Dec. 1, relations between the U.S. and Mexico will be back to the high point they were during the first year of his administration. One encouraging indication of this is the decision last week by both governments to abandon the idea of closing the North American Development Bank, or NADBank.

The bank is the only permanent institution created under the North American Free Trade Agreement. Located in San Antonio, its purpose is to invest in environmental projects, mainly infrastructure, on both sides of the border, but mostly in Mexico. Members of the Congressional Hispanic Caucus gave President Clinton their votes for NAFTA partly in exchange for the creation of this bank. It was meant to contribute to slowing down, if not halting, the so-called race to the bottom on wages, working conditions and rights by promoting this much-needed investment.

Its critics have referred to NADBank as the NADA Bank -- the bank where nothing happened. In fact, NADBank has been a slow, somewhat cumbersome institution, and some of its work has been disappointing, mainly because of excessively tight bureaucratic procedures. However, it has also financed 90 major infrastructure projects worth more than $1.3 billion and directly benefiting more than 6 million border residents.

Now, with its future more assured, there are ways to improve NADBank and remedy the reasons for its slow project development. Its procedures can be streamlined; Canada can eventually be persuaded to join; the bank can lend more, and more quickly, and be more ambitious with just a bit more guidance and support from the U.S. Treasury and the Mexican Finance Ministry.

Most of NAFTA's drawbacks have been its omissions: it hasn't helped solve immigration problems, it hasn't created energy resource transfer mechanisms to cushion its downsides in each country (but particularly in the poorest of its members). As things finally begin to move forward on immigration reform, as the need for a North American energy policy becomes ever more obvious, as we move closer to the 2008 lifting of the final NAFTA tariffs on corn and beans, it is the right move to also strengthen NADBank, an institution with so much promise.

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