BY ARGIRIS MALAPANIS

When Jack Kemp and Albert Gore - the Republican and Democratic candidates for vice president of the United States respectively - faced off October 9, one actual point of debate among them was over Mexico.

Kemp suggested that the Clinton administration policies caused the worst economic crisis in that country in decades, fueling immigration into the United States. Gore countered that the massive loans the White House arranged to shore up the Mexican economy following the collapse of the peso there in December 1994 were a big success for Wall Street and Washington: they resulted in a handsome profit for the U.S. rulers.

Since the vice presidential debate, William Clinton has consolidated a fat double-digit lead in the polls over his Republican opponent, Robert Dole, whose campaigning has become increasingly desperate.

Referring to what he called foreign policy blunders by the White House, Kemp stated in the middle of the debate in St. Petersburg, Florida, "One of the most serious problems was the tremendous effort by this administration to force on Mexico a devaluation of their peso. The economy has dropped by 40 to 50 percent.... We cause the problem and then we have to bail them out."

On Dec. 20, 1994, the government of Ernesto Zedillo announced a devaluation of the Mexican peso. In response, international money traders unloaded the currency hand over fist, driving it down 40 percent against the U.S. dollar within one week. The collapse of the peso raised fears among U.S. banks and other imperialist financial institutions that Mexico could default in interest payments. The country's foreign debt stands today at $98 billion, or 38 percent of Mexico's Gross Domestic Product. Washington quickly cobbled together $50 billion in "loan guarantees," $20 billion of which came from the U.S. Treasury and the rest from the International Monetary Fund and banks in Europe.

In exchange, the U.S. rulers extracted an agreement from the Zedillo administration that all revenues from the state-owned oil monopoly Pemex would be deposited in an account at the Federal Reserve Bank of New York before being transferred to Mexico -or seized in the case of a loan default. The Zedillo regime also agreed to carry out a harsh austerity plan to repay the loans and continue to pay interest on Mexico's foreign debt. It subsequently imposed a cap on wage increases well below the rate of inflation, increased the sales tax from 10 to 15 percent, and raised fees for public services.

As a result, the gap between the capitalist minority in Mexico, on one hand, and working people and middle-class layers, on the other, swelled. While Mercedes-Benz sales to rich Mexicans increased 50 percent over 1995, real wages for workers fell in May for the 16th consecutive month, to 9 percent below what they were a year earlier. The number of working people classified as living in extreme poverty grew in the same period to 22 million, up by 5 million - a 30 percent jump, in a nation of 92 million. `We made $500 million profit'
"No, when there was a crisis involving the Mexican peso, again President Bill Clinton showed bold and dynamic leadership," Gore responded to Kemp. "I want to hasten to add that Senator Bob Dole gave critical bipartisan support at the time. He agreed with the president.... He said this was a wise move."

The Democratic nominee continued, bragging, "People said it was a big risk at the time. We've ended up making a $500 million profit. All of the loans have been paid back."

"It's unbelievable that we could cause a drop in the standard of living of a friendly country like Mexico by 40 to 50 percent, unemployment goes up, we send U.S. tax dollars and IMF monies to Mexico, and we make a profit," responded Kemp. "At that level, that gives new meaning to the word `profitability' for U.S. foreign policy. The pain, the suffering, the unemployment,... the loss of the standard of living, the people who have had to come across the border of California, Arizona, New Mexico, and Texas." Kemp concluded his point with a heavy dose of right-wing demagogy. "If that's our foreign policy for the third world or Latin America, I believe more than ever we've got to elect a president who understands trade,... who understands private enterprise, who understands democratic capitalism, not socialism caused by the IMF and the Clinton administration."

While this relatively minor portion of the debate received wide media attention, the big-business dailies generally didn't quote the concluding remarks by Kemp.

An article in the October 11 New York Times pointed to some inaccuracies in Gore's statements and chided Kemp for not taking advantage of the errors. Zedillo has not paid up the entire loan, the article said. "Under pressure to pay back the loans before the elections, the Mexican government has moved quickly to repay $9 billion. Mexico still owes $3.5 billion. The next payment is not due until next summer." The Times also noted that the $500 million profit Gore referred to came from charging a "premium" on interest to Mexico, 4 percent higher than normal U.S. interest rates, supposedly to make up for the risk involved.

During the Florida debate, Gore stuck with praising the administration's record -both on foreign and domestic policy. Kemp continued to peddle the Republican proposal for a 15 percent tax cut as a centerpiece of spurring economic growth. According to a CNN opinion poll, Gore gained 4 percentage points in ratings after the debate, while Kemp dropped 5 percent.

The Kemp-Gore exchange on Mexico was preceded by an op-ed piece on the same topic by columnist Thomas Friedman. His column appeared in the September 25 New York Times.

"O.K., it's safe to say it now," Friedman began. "The 1995 U.S. bailout of Mexico's economy with a $12.5 billion loan worked. Mexico has now repaid $9 billion of that loan, including $1.29 billion in interest, and the Standard and Poor's credit agency just upgraded Mexico's government bonds from `negative' to `stable.' "

The columnist of the liberal daily then drew lessons for the capitalist class. He first praised Clinton for acting decisively, without seeking approval from Congress, which didn't appear forthcoming at the moment.

"As in war, so in economics, without U.S. leadership nothing happens," Friedman added. "In other words, without the G-1, there is no G-7 [Group of seven imperialist powers: Canada, France, Germany, Italy, Japan, United Kingdom, and United States]. Unless America is ready to act unilaterally, it will never have allies with whom it can act multilaterally."

Mobilizing the bankers behind the White House was also crucial to Washington's success, Friedman said. He quoted Mexico's finance minister Guillermo Ortíz to amplify his point. "In the absence of the U.S. and I.M.F.," Ortíz reportedly said, "we would have had to declare a moratorium on debt repayments. There would have been lawsuits. It would have been a mess."

Lesson four was the clincher in Friedman's piece. "Culture matters even more than central banks," he stated. "To pay for the bailout, Mexico cut the standard of living for most of its people by 20 percent. There should have been a revolution, but there was barely a demonstration." Friedman attributed the apparent miracle for the bourgeoisie in both countries to the "strength of the Mexican family." He quoted Antonio Madero Bracho, chairman of Sanluis, a mining conglomerate in Mexico, saying, "People moved in with each other, and the family really took the place of social security and unemployment insurance." Wall Street considers Clinton winner
"If stock prices were votes, it would be Clinton in a landslide," commented an article in the October 13 Washington Post, referring to the ongoing boom of prices on the New York Stock Exchange.

The Clinton administration is working overtime to consolidate this kind of backing by touting its credentials in pushing through recent antilabor measures. Associated Press reported October 14 that the Clinton campaign began airing a new radio advertisement. The message centers on the president's signing of the Defense of Marriage Act, which outlaws recognition of marriages between gays and lesbians and bars homosexual couples from having access to some federal benefits. It also presents Clinton's support for a "complete ban" on late-term abortions "except when a mother's life is in danger" or when a woman "faces severe health risks."

As the writing on the wall by the major owners of capital is becoming clearer, Dole has dropped putting a lot of energy into arguing the Republican economic program in his campaign stops and has focused on desperate attacks on Clinton's morality.  
 
 
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