The Foreign Service Journal, October 2007

essary support to the new arrivals as they find a job and a place to live. Three decades ago there were virtually no Mexicans in the New York City area. Then, a few poblanos (inhabitants of the state of Puebla, east of Mexico City) began arriving. Today, it is estimated that half a million Mexicans reside there. Two or three dozen of them— including my friend Leobardo López Pascual, who worked as a barman in the Twin Towers’ Windows on the World restaurant — died on 9/11. Three Scenarios Back in 1986, when the United States passed the U.S. Immigration Reform and Control Act, I had a conversa- tion with Charles Pilliod, then the American ambassador to Mexico. He asked me what I thought of the measure. I told him I thought it would raise marginally the cost of counterfeit papers that the immigrants would now be required to show to their employers, but wouldn’t accom- plish much else. Amb. Pilliod told me I was a cynic — to which I replied that I thought I was a realist. After all, the law did not change any of the basic incentives that induce my fellow Mexicans to cross the border. My words turned out to be prophetic. True, in the four years that followed IRCA’s enactment, the number of unauthorized immigrants living in the United States dropped from four million to 2.5 million, thanks to the new routes to legalization the bill provided. But the influx of new illegal immigrants into the U.S. continued to grow and has now reached 12-13 million, of whom some six to seven million are Mexicans. Considering the collapse of President Bush’s immigra- tion bill in Congress, here are three possibilities for what happens next. Win-Win: In the positive scenario, Washington and Mexico City cooperate to bring about the necessary con- ditions for faster growth south of the border. Among other things, these include substantial public investment in improvements to the country’s physical and intellectu- al infrastructure, following the example of the Mediter- ranean countries within the European Union. Note that this option does not rely on large financial transfers from the U.S. to Mexico, as the E.U. provided to Greece, Portugal and Spain. That is fortunate because the purse- strings of foreign aid are held by the U.S. Congress, which frequently imposes political conditions that are unacceptable to the receiving country. An alternative route to the same goal, also drawing on the E.U. model, would be to form a North American monetary union, adopting the U.S. dollar as the single currency of Mexico, Canada and the U.S. The effect when Ireland and Spain joined the euro zone was pro- found: interest rates dropped to a third of their previous levels, spurring an unprecedented boom in investment, particularly in the construction industry. As a result, not only have these countries grown at the fastest rates in their history, but they have created more jobs than ever before. Spain created a million jobs a year for a decade, a sharp contrast to the previous 50 years, during which the labor force stagnated at around 12.5 million. In such a booming environment, it would be easy to tap the international capital markets and the multilateral development banks for the resources to revamp Mexico’s infrastructure without any aid from the U.S. If this were to happen, a large number of the Mexicans living abroad would hasten to return home, as the Irish and the Spanish did when their countries started growing at a record pace Lose-Lose: Unfortunately, a far worse outcome is all too imaginable: Anti-immigrant zealots in the U.S. not only effectively close the border to the flows of immi- grants but impose generalized and stiff penalties on their employers — then detain and expel millions of illegal res- idents. Such a mass repatriation back to an environment in which there is no new investment or faster growth would have unpredictable but almost assuredly negative consequences, starting with growing social unrest and political instability. In such a case, the border would become a more vio- lent and dangerous zone, necessitating increasingly tougher barriers to stem the return of desperate migrants who are unable to find the means to survive in their coun- try. In fact, we are already seeing some of the dire con- sequences of tighter controls as immigrants are forced from old routes to deserts and other dangerous terrain. Even leaving aside such humanitarian concerns, those Americans pushing for more punitive treatment of Mexican migrant workers should consider the question of what would happen to the U.S. economy if they stopped coming. Many economic studies concur that illegal immigra- tion has net positive effects on the U.S. economy, enabling it to respond to market forces rapidly and smoothly. Demand for labor increases when the U.S. economy is booming and unemployment is relatively low. F O C U S 20 F O R E I G N S E R V I C E J O U R N A L / O C T O B E R 2 0 0 7