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7/1/1997 - Banking on the Border: Can we clean up our mess? by William F. Foote

Banking Border Can clean ourmess MEXICO CITY Mexico July ByWilliam F Foote It degrees U S Mexico border Like poisonous green textureandcolor theNewRiverpoursinexorably theUnited States Cooking desert toxic ingredients agricultural pesticides indus trial chemicals human waste corrode sunken amazing swiftnessand dissolvewaywardgolfballs Thatpartofthecourse isofflimits saysJerrySantillan thecitymanagerof Brawley California pointing towheretheNewRiverpassesthrough theDel Rio Country Club Located miles north border agricultural people heart Imperial County world richestfarmland andone ofitsmorewretchedwaterways Golfersmightcatch cholera ortyphoid ifthey retrieve their balls Santillan halfjokingly TheNewRiver amicrocosm larger binational tragedy Overthe years U S Mexico border egion experienced dramatic surge lation industrialization To process brought important nomic benefits countries In Mexico border maquila industries factories designed assembleimported partsandexport finished goods U S virtually produced quarter Mexico exports The people employedin sectorwerenearlyone third Mexico total manufacturing workers As U S American vestment maqlila sectormaybe continued global competitive ofthe U S economy But allthiscomesataprice thebor becoming ronmentalwasteland Thankstohordes seekers streaming northward Mexico heartland region population swollen eleven Explosive industrial growth uncontrolled urban expansion outstripped reach ofbasicmunicipal services Among other things border sister citieslackpotablew sewage solid waste treatment facilities especiallyontheMexicanside This poses question extent andforhowlong cantheborder Jet7ySaJltillal thecitymanagerof economyflourishwhile itsfragile Bawley CA standsbesi tileNewRiver neglectedenvironment founders Theenvironmentalproblemisatimebombwaitingtoex plodeonboth sides oftheborder ProfessorRosaMarfa Romero whoheadsan environmentaleducationprogram UniversidadPedag6gicaNacionalinthebordercityofMexicali Toofewpeoplehearitticking Fortunately signatories theNorthAmerican Free TradeAgreement NAFTA notedthattickingsound ifonly faintly InthewakeofNAFFA throughasideagreement nationallendinginstitutionwascreatedwithjointU S Mexico funding currently 450million butexpectedtoreach 3billion cover environmental trade TheNorth AmericanDevelopmentBank betterknownastheNADBank wasempoweredtomakeorguaranteeloanstofundinfrastruc tureprojectswithin100kilometers 62miles oftheb orden In recent interview Victor Miramontes NADBank current director stressed private sector focus binational institution We principally lender oflast resort saidMiramontes whogrewup E1 Paso Texas andholdsanMBAfrom Stanford University In stark contrast European Union which requires member nations subsidize their poorer trading partners billions dollars infrastructure financ NAFTAincorporatesno contingencyprovision specialfundsandno special taxes Ourbigjob money elsewhere Miramontes private investors government grants nations resort ourowncapital Sounds butwhathas theNADBankachieved Nota thing saysAntonio Saldivar ofproject financing NationalBank ofMexico BANAMEX country largest private commercial Four years border infra structureprojecttoshowfor It sscandalous Saldivar specializes municipalwater projects believes theNADBankis overly bullishabout private vestment environmental infrastructure border Noting decade region least 8billionjust tobringdrinking water sewage treat garbage collection residents highly skeptical privatemoneyalone suffice At thesametime theNADBanksuffersfrombureau cratic constraints render incapable grappling dizzying complexities cally strapped municipalities Suchviews reflectone ofanongoing debate theperformanceand future oftheNADBank As S Congressconductsits firstmandatorythree yearreview ofNAFTAthis summer Bank story raisesbroader concernsregarding trade policy TheClintonadmin istration keentowin track authority tobeginnego tiating treaties countries Chile intends applytheNAFTAprescription acrossthe Americas Butis model necessa working order Some think WF Area Detail UNITED STATES Sonora miles SaltonSea CALIFORNIA Brawley ARIZONA caexico STATES L Mexicali BAJA CALIFORNIA Laguna Salada Dese SONORA changes order forcing U S companies raise living standards their U S employees compelling foreign trade partners enforce labor prevent negative environmental consequences scrapping supra national lending institutions perform Respondingto criticism NADBankofficials claimthey misunderstood Blaming their track recordon theBank sdelayedcommencementofactivities because ofMexico financial crisis theysaytheBankhas nevertheless In years operation project proposals havebeen received anestimated million Ofthose fourhavebeen approved forNADBankfinancing withadozenmore expected follow shortly havingalreadyb tified Border Environmental CooperationCom mission BECC NADBank ssisterorganizationincharge ofproject screeningandtechnical assistance Politicians inWashingtonD C farawayfrom border achieved states BECC official conference border infrastructure recently Mexicali capital Baja California Butwhentheylearnofour results sheaddsquickly appropriate institutionsneededto resolve environmental problems along border place Mr Santillanwouldagree Wavingto putters theDel RioCountryClub Brawley citymanagerwasallsmiles asourconversationturnedtotheNADBank This cause binational lender recently shepherded through successful public offering nanceits 25millionwater treatmentplantex pansion Actually aswedrovethroughtown wouldn guessed Brawley haswatertroubles theNewRiver withstanding Thanksto cleanerwater providedby canal Colorado River lushlawnscarpet desertcom munity gushing sprinkler water abundant irrigation agricultural region mostfertile inthe U S Being frost enjoys uninterrupted constant growing seasons Despite thebooming rural economy however Brawleyhasawhopping25percentunemployment cording Santillan This results large measure thehighlymechanizednature S agribusiness which needsfew related service industries Wejust manyjobs offer lamented Santillan steering Brawley sleepy street Judgingbythepedestrians wemight stillhave south border percent local residents ofMexican descent ofwhom Santillan cousins Brawley poverty apparent Tower ingabove ThriftiesandanemptyPizza Hut agrandyet dilapidated hotelwith boarded doorsandwindows nates central square We attract maquila suppliers Santillan twehaven thadanyluck Until recently Brawley swater facili matched dismal state economy In 1991whenthe State ofCali fornia served water quality noncompliance order treatment facilities years Withno financialplanningor maintenance increase water rates years Brawleywasin viola clean water codes about Santillanmakesno apologies Our fathers pretty clueless urban planning admitted Growing docks wenevergotany guidance Never untiltheNADBank along Brawley needed Miramontes Small towns advice raisewaterrates Todo thepeopleandpoliticians Brawley convinced their troubles stemmedfrominsufficientwaterrevenues attrib utable years ofundercharging service Despite fierce politicalopposition managed increase rcent years They nearly ranusoutoftownforthatone called Santillan Then bidding process HopingtobuildBrawley treat facilities reputable engineering San Diego submitted struction proposal Brawley equipped analyze With NADBank shelp determined thebudget percent overpriced So rejected proposal restructured concession splitting master project smallercomponents allontheNADBank advice This enabled small localconcerns compete business generatingemployment cutting costs matically Considered together these developments explainwhyBrawleysuccessfullyovercame itsunrated credit status It story terms local inexperienced community learn taking reins making concluded Miramontes That isgoodnewstobe American The question similar stories Mexico Putanotherway istheNADBankca pable dealing dogged stacles exist south oftheborder least which Mexico torically ridiculously cheap water rates Just imagine cities raised monthly Brawley Adolfo Gonzalez ofenvironmentalaffairs Mexican state ofBaja California Thatwouldincitebloodyriots Just worrisome Mexico municipal market Neither cities towns enjoy EPA subsidized state revolving funds environ mental infrastructure development With financial autonomy munici palities state federal thorities permission build school water Treated children years cities Wehelp Jerry Santillan construction Mexico local governmentspredictably ofBrawley water lackthe resources institutions andman The first biggest allenge treatment plantfacilities agement skills needed Institute Current World Affairs develop infrastructure projects Finall addinginsult injury theMexican Constitu prohibits municipalities incurring eigncurrenciesorborrowingfromforeign entities But apply theNADBanktoo Absolutely replied Miramontes The Bankis developing partner shipswith financialintermediaries inMexico Fi nanceMinistryandBanobras astatedevelopmentbank clear hurdle Askedwhetherthere weren tmany otherobstaclestoovercome thebankeragreed yetstill insisted there arean equalnumberof solutions Consider small communities Mexico Soon after launching operations theNADBankrealized these towns partners develop projects pointwheretheycanbecertifiedbytheBECCandqualify creditfrom theNADBank Consequently Institu tionalDevelopment Cooperation Program IDCP established lastDecemberto sistpublic utilitiesinthe areasofinstitutionalstrengtheningandfinancialdevelop This presumably willhelp ensure infrastruc projects sustaining through We alreadycommittedIDCPfundsto eight cities Miramontesinformed andwillbeworkingwith 32morebyyear Regarding municipal market Mexico banker offered simple solution We TheNew River WF becomethatmarket Justas itwouldontheU S NADBankplans agreements Mexican bordercommunitieswithallthenormaltermsandcondi tions minimum reserves excess coverage The Bankwillthengo U S marketplace borrowmoney alowerrate thananyothersource offunds available inMexico AskedwhathappenswhenMexican utilities charge pesos service dollars Miramontesexplained ahedgingmechanismhad readybeen setupwithBanobrastocoverexchange risks AsforMexico cheapwaterfees Miramontesa knowledged given socioeconomic conditions border manyinfrastructure projects willneverbevi without grant component As wouldhave justlastApriltheEPAandtheNADBank forged partnership through called Border Envi ronmental Infrastructure Fund which funnel million ofEPA grant resources through Bank This moneywillbe available construction aswell sition assistance whichrefers resourcesmeantto communities adjustment higher water rates necessary ensure infrastructure sustaining This Miramontes quickly downplayed grant quotient EPA NADBank partnership Inkeepingwith theBank freemarketfocus explained actually NADBankavoid taking paternalistic approach simply handing money Credit always dominantrole isthesmallestpartofatransac Municipalborrowers agree themostthey reasonably affordbeforetheNADBank seeks complementary funding That commitment stressed ensures localcommunitieshave stake their project TheMexicantownofNaco offersacaseinpoint Lo catedinthe state ofSonora thecommunitysitsjust across theborderanduphillfromNaco Arizona Currentwaste watertreatmentplantsinNaco Mexico finemifit notraining Whenit thesewageplantoverflows intotheArizonatown fillingthestreetswithsewage Topayfor 000sewageplant theNADBank helpedNaco conductan affordability analysis TheMexi decided could sustain fromthe Bank Subsequently Miramontesman convince Mexico National Water Commission EPAto additional What important local citizens responsibility theirownhands TheBank onstrated mobilize local federal interna tionalorganizations assist smallbordercommunities These deserve praise doubt Yet symbolic loans aside Naco success story overwhelmingly grant dependent which brings nagging question howwill theborder region cover billion bringing drinking water sewage treatment garbage collection people decade Howcan NADBank whichnow lionincapital andmayormaynothave 3billionwhenfullycapitalized upthe difference Perhaps otherborderresources avail Ponderingthatpossibility touredthe Mexicali passing cacti bones squatter settlements stretch across barren Laguna Salada desert NorthwestMexico Nearthe hodgepodge story cinder block houses I located potential source alter native infrastructure funding multina tional maquiladoras Sony Daewoo Electronics AceInc andBlack Decker Exiting latter sultramodern factory dressed workers lunch break fanned Industrial Av Wom enmostly allseemedtobesmiling their relative fortune Making comparedwith55anhourinthe U S theynevertheless earnan average percent higher Mexico 3dailyminimumwage Maquiladoras alsoincreasingly provide services child benefits which unheard ofinmostMexican factories Sure likeithere saysMariaGonzalez agiggly26 southern state Veracruz workedtheBlack Deckerassemblylineforayear It stepup frommyjob inTampico Cheap labor Mexico global dustry Powerful incentives south atedby country environmental record which underscores difference environmentalcompliance costsbetween Mexico U S Exploring topic oneacademic attempted quantify thenumberofcom panies U S Mexicali escape stringent TheBlack Decker maquiladora Mexicali environmental regulations Wrote Professor Roberto Sanchez Ten percent maquiladoras Mexicali sidered environmental regulations among themain factors decision leave U S and17percentconsidered itafactorofimpor tance Onthe selection ofMexicali almost maquiladoras considered weaker environmentallegislationinMexico amainfactor relocation another percent considered factor ofimportance Taxbreaks offeranotherlucrativewindowofopportu global multinationals border region The problem becausemaquiladorasbearsuchalighttaxbur their contribution local infrastructureand vironment scant Not impact industrial pollutioncompareswith ofdischarges ofhuman waste region sovercrowdedurban sprawl Yet years maquila sectorhas served themainmigratory magnetpullingMexicanworkersnorthward Wouldn thereforebejustifiable topushthe multinationalstoward assuminggreater responsibilities Don expectthem leadon issues cautioned Miramontes categorically rejects placing burden maquiladoras It alistic neither green taxes The unspoken implication maquiladoras toopowerfultobe fronted Truth Mexico maquilaeconomycouldmoveona With seven eight developing tries waiting wings global inves might leave overnight Mexico madethewrongmove The rightmove TheSonyfactory inMexicali Roberto Sanchez Natural Resources Journal Institute ofCurrentWorld Affairs Mexicali cabby CastuloAngulo according toMiramontes focus ratheron maquiladoras culpritsbutcustomers Becausewhen water sewer treatment plants built multinational factories willbe reliable clients around assum ingthe appropriate structures place That swhere wecomein saidMiramontes tohelp localcommuni package their projects palatable indus trial concerns Cont inuing Mexicali flagged conversedwith driverabout senvironmental problems theNewRiver suspended pollution smelly barrio After discussing these topics cabbyin sistedontakingmesomewhere special yetrefusedto revealwhatorwhereitwas Visiblyskeptical declined directedhimtomyhotel Trust mischievous Castulo Angulo driver wasborn Mexicali which jokingly calls ciudad huevos frios roughly translated ofthe crotches Due theintense explained motorists alwayshaveice drinksbetween their Laughing raucously series hisownjokes Castulo steered pastthe shanty towns desert alongsidejunk yards brimming rusty bicycles refrigerators scrap metal It allcomesfromthe U S Castulo awareofmygrowingcuri osity Cheap second chandise Most stuff falls apart quicklyandendsuphere Sand dunes rippled across plateau In distance ofthe mountains darkhorizontal separated Laguna Salada desertfromthe risingSierraMadre Callingmyattentionto Castulo orderedmetokeepmyeyespeeled WF onwhatappearedtobeasedimentarylayerofrock Thor oughly enjoying suspense revved engine swerved anunpaved trundling across dunes Soon mysterious divide focus revealing itself seven Tires shoutedCastulo eightmillionofthemor Manufactured U S countless rubber rimmedthe hills rottingin scorching TireMoun locals built informal llateros Spanish tirevendors whoturnbig profitsimporting tiresfromtheU S andsellingthem forabout10dol piece Mexico This considered purchase disintegrates three months Junk markets manifest mselves across border region Local authorities hesitant clamp ofpoliticalbacklashfrom strappedconsumers At least official however fiscal opportunity thejunk anothersourceofborderinfrastructurefinanc perhaps Adolfo Gonzalez environmental affairs Baja California lobbying withU S border states Hisreasoning State ofCalifor niataxesnew tirepurchases tocover finaldisposaland recycling costs Millions these tires Mexico ofthat taxrevenue should Your country never allow Castulo perched Tire Mountain Maybe nevertheless encouraging other tempts resolvingenvironmentalproblemsonthe U S Mexico border Looking across desert Mexicali theNewRiver thetown ofBrawley farbeyond contemplated future Cleaningup binational coordination neverwas Funding remain tight ButtheNADBankismakingpr ogress Ifnothing afterdecadesofneglect bankingontheborderhas finallyhelpedturnthe attention ofNorthAmericatoward region ecological disasters Of course there otherways SaidCastu Let sburnTireMountain hopehewas kidding Atop Tire Mountain Institute CurrentWorld Affairs Fellows their Activities Institute ofCurrentWorld Affairs The Institute ofCurrentWorldAffairs FOURWESTWHEELOCKSTREET HANOVER NEWHAMPSHIRE 03755 ADDRESS CORRECTION REQUESTED Author Foote William F Title ICWA Letters The Americas ISSN Imprint Institute Current World Affairs Hanover NH Material Type Serial Language English Frequency Monthly Other Regions EastAsia Mideast North Africa Europe Russia South Asia SubSaharan Africa Chosenon thebasis ofcharacter previous experi promise Institute Fellows young professionalsfunded spend aminimumoftwo years carrying designed programs study writing outside United S tates The Fellows required report their findings experiencesfrom fieldonce amonth Theycan write subject formally informally The result unique report analysis periodic assessment interna tional events issues