Mexicans fear that work will head south

Rio Grande: Capitalism's front line

By David Loyn In Mexico

The Rio Grande which separates Texas from Mexico is capitalism's front line.

On the north side is enormous wealth, and on the south a country where $100 a week is a good wage.

Why does the Mexican economy have to go down just because America is fighting a war?

Ramon Aguilar, unemployed Mexican

It is not hard to see what attracted US industry across the border after the signing of the North American Free Trade Agreement (Nafta) in the mid-1990s.

As well as low wages, there were substantial tax breaks and almost no trade union membership.

Gone for ever?

US industry set up hundreds of assembly plants close to the border.

But as the US economy contracted after the shock of 11 September, Mexico suddenly became far less attractive.

Security checks meant that it took longer to bring goods across the border, and more than 300,000 people lost their jobs as factories closed.

The fear now is that as the US economy stabilises, jobs will not return to Mexico as the restless energy of capital will search for places with lower wages.

Terror link

The Mexican city of Ciudad Juarez has spread right up to the border so that in places only a wire fence separates it from El Paso, Texas.

That wire fence is like a Berlin wall, guarded by cameras and constant patrols.

Ramon Aguilar lost his job when he was injured at work, and he has not been able to find another one.

He lives with his wife and son in a house in a dusty suburb of the city.

From the top of the hill near his house he can see over the fence into the US.

He sees his unemployment as directly related to the US war on terror.

"Why does the Mexican economy have to go down just because America is fighting a war?" he says.

Implications for crime

The factory estates are quiet, as "for sale" signs go up on nearly-new assembly plants which no one wants any more.

Luis Miguel Esparza, a lawyer who works closely with the industry told me it is hard to sack people.

"It's hard to look at their faces," he says.

"It's hard to tell them 'it's over', giving them their severance pay cheque and all of that."

But as a resident of the city he is worried about the social effects of the sudden shakeout of jobs, particularly on the crime rate.

"You can only imagine the impact that has in a community in which security is a problem with the crime rates."

Expansion plans

The Mexican government is convinced that the free trade policy is the right one, although, in contrast to other free trade zones such as the European Union, there has not been a major transfer of assistance from the richer areas to the poorer ones.

Despite the setbacks, the Mexican government has no doubts about the policy, and is pressing ahead with the Plan Puebla Panama, which will open up its neighbours in Latin America to the free trade zone.

Wages there would further undercut those in areas such as Ciudad Juarez.