An Interview with L

Mexico's President speaks out on oil and relations with the U.S.

Jose Lopez Portillo lifted a glass of champagne last February and lectured Jimmy Carter on his country's right to be respected. Carter took heed, because the Mexican President's bold assertion of national pride and independence was backed up by what may be the richest energy supply in the Western Hemisphere. With proven reserves of 40 billion bbl. and estimated potential reserves of as high as 200 billion bbl., Mexico is now moving into the top rank of the world's oil producers.

As OPEC raises its prices and gas shortages affect many U.S. cities, Americans are now looking to Mexico as a new source of energy supplies. But relations between the two countries have not been as cordial as the Carter Administration might like. Frictions continue over such issues as illegal Mexican immigration, American trade barriers to Mexican agricultural products, and the flow of drugs into the U.S. Moreover, Mexican resentment has been simmering since Energy Secretary James Schlesinger abruptly vetoed as too costly a sale of natural gas from Mexico in December 1977. Carter's visit, however, paved the way for negotiations over the divisive issues, and as Mexico's major trading partner, the U.S. remains the logical client for its oil exports.

Despite the influx of new oil money, Mexico continues to be plagued by a formidable array of economic and social problems. The gap between the rich few and the poor masses seems to be increasing. Inflation is running at 16% annually, and nearly half of the country's 18 million workers are totally or partly unemployed. Mexico's population (currently 67 mil lion) is growing at an annual rate of 3% and might reach some 100 million by the year 2000. For millions of Mexico's landless peasants, illiteracy, disease and malnutrition are chronic problems.

During the next four years, these problems will weigh heavily on the shoulders of Jose Lopez Portillo, a onetime law professor and author who spent nearly two decades in public administration before his election to the presidency in July 1976. In the economic field, Lopez Portillo's performance has been quite creditable. By holding down public spending and wages, he has been able to stabilize the erratic peso, slow inflation, reverse the flight of capital and stimulate private investment. After several sluggish years, Mexico's gross national product is now increasing by about 6% annually. Lopez Portillo has also promoted a certain degree of political liberalization, although his Institutional Revolutionary Party (P.R.I.) continues to dominate Mexican politics as it has for the past 50 years. To no one's surprise, the P.R.I, swept up some 70% of the popular vote in this month's congressional elections.

Last week TIME Chief of Correspondents Richard L. Duncan interviewed President Lopez Portillo at his official residence, Los Pinos. Excerpts from the interview:

Q. How would you characterize the position of the U.S. in the world today?

A. I believe that the U.S. is in the process of revising its policies, but those policies are not yet well established, and so this trend of revision must continue. This, of course, creates problems of uncertainty. The most typical example of this is in the field of energy. The U.S. is just beginning to define its policy and has taken a long time to act on it, as it recently did in Tokyo. The U.S. thus runs the risk of acting inconsistently.

What I have said about energy can also apply to other very important aspects of North American policy. I could mention what has happened in Iran and Nicaragua. The U.S. questioned both systems without having anything to offer in substitution. I think this situation is serious because of the tremendous power and influence of the U.S.

Q. Is it easier to deal with a U.S. that is uncertain about its policies, as it is now, than the one that was very sure of its policies in the past?

A. That depends on the content of that policy. A "big stick" policy is a well-defined but disadvantageous one. I prefer a neighbor who is open to communication and works within a spirit of fairness and respect. I would prefer that kind of neighbor to one who was well defined but rigid.

Q. Would it be fair to characterize Mexico's foreign policy as being somewhat more active than it has been in the past?

A. No. We are simply living in a world of ever broadening communications. But I want to make it clear that Mexico has never changed its foreign policy. Both in the case of Nicaragua and in the case of Cuba, Mexico has maintained the principle of non-intervention in the domestic matters of other countries.

Q. Are you at all uneasy about the possible development of events in Nicaragua and in Central America?

A. Yes, I am. I feel great pain over what is happening in Nicaragua. Too much bloodshed has gone on there. It is the Nicaraguan people who are paying the price, [especially] the young people. A real genocide has been taking place. And the worst thing is that the situation has not yet been resolved.

Q. Will your government recognize the proposed five-member provisional junta?

A. We are not yet contemplating this. We are waiting for things to settle down and for further developments within the territory of Nicaragua. In good time, we shall make our own decision.

Q. Cuba has been very active militarily in other parts of the world. Do you worry about Cuba's future political and military activities in this hemisphere?

A. Unfortunately, it is not only Cuba that acts militarily in the world; many other countries do the same thing. We have examples very close at hand. I can only tell you what Mexico does: Mexico does not intervene [militarily]. Mexico does not want for itself what it does not want for others. We feel that military intervention is never positive or legitimate, regardless of whether the country is weak or strong. This is what we think concerning Cuba and any other country that would intervene militarily.

Q. What is your reaction to the recent OPEC price increases?

A. I believe they put the world in an extreme situation. These decisions have unfortunately been taken without regard for their general effects, one of which will be to cause a certain amount of recession. Together with the inflation in the present-day world, this recession will upset the economy even more. I am especially concerned for the developing nations, which are going to be cut as if by a pair of scissors. One of the scissors blades is the price of oil. The other is recession in the powerful countries, which will impede exports from the poor nations, thereby cutting off their possibilities for development.

Q. What effect will the recent oil price changes have on the Mexican economy?

A. In the short run, they will have a beneficial result, which will help us to finance our development. But no country today can have a sound and healthy development if the rest of the world is not sound and healthy. Therefore we know that in the long run the inflationary impact of the price of oil and the recession in the industrialized countries will also hurt us.

Naturally [it will hurt us] less than if we didn't have any oil, and that is why we have to follow the price trends. Oil is our first historical chance, and may be the only chance we have, of solving our problems as a free country and a fair one.

Q. Must Mexico raise the price of its oil every time that OPEC raises its price?

A. Here I would like to make a preliminary remark: the U.S. is an oil-producing country; it has more oil than Mexico. But does the U.S. sell its oil at a lower price? We have to link our price to the price of OPEC because otherwise we will only get the negative impact of the oil hike and not the positive effects. We act accordingly. But what Mexico does is to stay out of the speculative spot market. Our sales respect the price that has been fixed. We hate speculation. Mexico is not a country that speculates and it never will speculate.

Q. What concrete steps should be taken to improve relations between the U.S. and Mexico?

A. Various [joint] committees are now studying certain aspects of our mutual relations: financial and commercial exchanges; the movement of persons [into the U.S.]; drugs, which are being controlled increasingly on this side of the border; and contraband from the U.S. into Mexico. Taken together with the problem of the capital market, all these questions must be looked into carefully, because a curious thing is happening: at times of crisis, Mexicans take their money out of Mexico and put it into the U.S.; the U.S. accepts this Mexican capital but does not accept the Mexican worker. This is a problem that we have to bring up and examine.

Q. What about the exports of fruits and vegetables?

A. Well, that is a typical example of the uncertain nature of our commercial relations. It is difficult to plan an export market between two countries when the decisions are subject to local interests. It is difficult to agree on a trade policy with the U.S. because we never know exactly what is going to happen.

Q. But the decision now pending on tomatoes and other agricultural products is a federal decision, not a local one.

A. However, it is a federal decision that is promoted for local interests--those of Florida, for example, in the case of tomatoes. I understand perfectly well that the federal officials have to bear in mind all these local interests. But we do not know with whom and how to take up these matters in order to arrive at permanent agreements. We cannot get organized when the policy is always changing.

Q. What about Mexican immigration to the U.S.?

A. I don't know to what extent this is a real problem for the U.S. I have been thinking that if our people go to the U.S. it is because they find work there. I am sure that the presence of Mexicans in the U.S. brings an element of disorder, but there is no Mexican unemployment in the U.S. This should give the U.S. food for thought.

Q. Does your vision of Mexico's role in the world include a special relationship with the U.S.?

A. A more responsible relationship. Our logical client is the U.S. The U.S. is our largest trading partner. This should lead to a solid, long-term relationship. But it should include a condition that seems very important to me: that there be no deformation because of our bilateral relationship. Instead, this relationship should be included in the world order.

Q. There is much discussion these days about a possible "Common Market" that would include Canada, the U.S. and Mexico. What are your thoughts on such a union?

A. Yes, a good deal is said about this. Referring specifically to energy, it has disadvantages and advantages. At this time it's only a thought. We can contemplate such a thing if it is conceived within a framework of equality and dignity, and not submission or subordination of the interest of the weakest party, which is Mexico. But another condition is that this relationship must exist within the world order

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