Mexican Deal: It’s Right, and It’s Smart : Washington’s bipartisan rescue plan is firmly in long-term U.S. interests

Two weeks ago the Mexican fiscal crisis that began when the peso was suddenly devalued Dec. 20, setting off a panic in financial markets from New York to Buenos Aires, finally began to calm down. The reason was a strong showing of bipartisan support for Mexico by President Clinton, House Speaker Newt Gingrich and Senate Majority Leader Bob Dole, all of whom announced that they would support a $25-billion-to-$40-billion financial rescue package for a close neighbor and important trading partner.

Since then, critics on both sides of the border have begun to find fault with the rescue plan, under which the U.S. Treasury would in effect become the co-signer for any commercial bank loans that President Ernesto Zedillo may need to get Mexico through the short-term liquidity crisis caused by the peso’s decreased value. Neo-isolationists in the United States see no reason American taxpayers should take any risk--even the fairly minimal one entailed in this deal--for a foreign government. And narrow-minded naysayers in Mexico accuse Zedillo of ceding sovereignty to the Colossus of the North by, for instance, offering Mexican oil revenues as collateral for any U.S. Treasury funds put at risk.

The constant carping may be eroding the important unanimity shown by U.S. Democrats and Republicans when the aid package was first announced. But the Mexican deal must not be allowed to die, not just because it is important to our most populous neighbor but because it is just too important for the United States.

And, indeed, for Washington to turn its back on Mexico City now would be a classic case of shortsightedness. For not only would a prolonged slump in the Mexican economy increase the pressure that causes illegal immigration from Mexico, it would reduce the ability of Mexican consumers and businesses to buy U.S.-made goods. Granted, negative side effects of the peso devaluation are almost sure to occur to some degree. That’s because even with U.S. aid it will take Mexico a couple of years to regain its economic footing. But to withhold aid would prolong both the economic turmoil of Mexico and the negative side effects.

As the noted economist Robert Samuelson wrote on The Times’ Commentary page last week, the United States “cannot insulate itself from Mexico’s fate because we cannot insulate ourselves from its consequences.”

That is the statesmanlike vision that got Clinton, Gingrich and Dole to agree on a Mexican rescue package in the first place. It is the statesmanlike position that gave the markets confidence that a fundamentally sound Mexican economy would eventually bounce back. And it is the statesmanlike position everyone in Washington must now take to make this deal happen. It’s a classic win-win business proposition.