Fed Feeding Mexico's Addiction?

Categories: News

As the November elections approach, immigration has been pushed up to the top tier of voter concerns and political agendas. (If you've been snoozing, Kinky Friedman reportedly said he'd declare martial law on the border, while Carole Keeton Strayhorn said she'd call out the Texas Rangers, though during the recent debate she found herself at a loss to name the new president elected by "our good friends south of the border.") And while local candidates press for crackdowns, reform or federal action, the Federal Reserve is making it easier for undocumented immigrants to send money home in the form of remittances.

The subscription-only Wall Street Journal reports that a new program called "Directo a Mexico" enables U.S. commercial banks to make money transfers for Mexican workers through the Fed's own automated clearinghouse, which is linked to Mexico's central bank. Immigrants need no legal residence, just a Mexican consular I.D., to use the system, which is considerably cheaper than Western Union or other services that cater to immigrants in heavily Latino areas.

At a time when people are posting "Stop the Invasion" signs in their front yards and President Bush has authorized spending for a 700-mile wall along the border, you'd think immigrant advocates would be rejoicing over the Fed's move. And many are. Just not Carlos Quintanilla, a Dallas member of the League of United Latin American Citizens who as, part of his business, promotes products and services from Mexico.

"Mexico has become a junkie for remesas," he tells Unfair Park. The Fed's move is merely "adding more heroin to its addiction."


According to the WSJ story, remittances sent by Mexicans topped $15.5 billion in the first eight months of this year, or 20 percent higher than the amount sent during the same period in 2005. To Quintanilla, what has become Mexico's second largest source of foreign revenue is a way for our Southern neighbor to avoid its biggest problems, from corruption to drug violence to poverty. Instead of impassively watching its citizens flee their country's dysfunction by the thousands each day, Quintanilla says Mexico should be investing in small business assistance programs and job creation, not to mention cracking down on the drug trade and corruption corroding the state apparatus. "They're doing none of that," he says.


The Mexican government would surely refute such dismissals. But recent slayings and widespread narco-violence across the country, on top of the constant migrant out-flow (which Quintanilla maintains is also a brain drain), speak pretty loud. Just in the past month, drug lords lopped off heads and rolled them onto a dance floor in Michoacan, a Dallas businessman was murdered in his Mexico City hotel room, and a police chief was gunned down in Nuevo Leon. In the same time period, I've met at least half-dozen immigrants who say they risked their lives to leave Mexico simply because they had no other choice. One said he paid nearly $2,000 to be smuggled across the border and through the desert for a $8-per-hour job moving furniture.


"Mexico has a responsibility to provide a comprehensive long-term economic development plan so people want to stay in Mexico," Quintanilla says. "You can build a wall, make it 70 feet high, but if Mexico doesn't act, it will never stop immigration."


Alas, economists predict that even if Mexico scrambles to reorganize its economy to accommodate more workers, wages still wouldn't keep pace with American pay for a decade or more at the very least. Which means we can look forward to angry debates over walls and green cards and the American "identity" for years to come. --Megan Feldman



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