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What measures would you use to elevate living conditions and from where would the investment come? The investment, in part, has to come from within the country. If you take into account that we have had sufficient capital to make [foreign] debt payments, that we have had sufficient capital to make deposits in banks outside Mexico foreign banks here and in other parts of the world then there is by all means some capacity for internal investment. I think that these sources would permit a level of investment that could activate an economy capable of providing for the social needs in the country while still allowing for economic growth. In your speech last night, you talked about a politics of the foreign debt. Could you elaborate on what those politics are and what that means? Yes, in English it would be best stated as a policy, a foreign debt policy rather than , politics. Payment of the foreign debt is considered the principal priority. It shapes all of our political decisions. [Since 1982] the rule has been to first make the debt payment and only then consider other problems. In other words, first assign our resources to debt service, which accounts for about 60 percent of [public] spending. What is left can be applied to other necessities as determined by the government. [Instead,] we think that the priorities of the country, at this moment … must be to improve the living conditions of the Mexican people. This has to be done principally through measures that increase investment, real investments, on &large scale. And also, through measures that lower unemployment. Beside this there is also the priority, that is now ignored, of assuring that the economy will grow at a sustained and stable rate. These are the priorities that should be considered first when we make political, economic, and social decisions. The lack of investment in the country is obvious. Yet they [the government] evidently have ignored this. They have completely ignored certain sectors agriculture, for example, is destroyed in my country. Because there is no investment, there is no agricultural credit. The result is the destruction of infrastructure of irrigation canals, of roads, etc. And when I speak of agriculture, I mean agriculture for internal consumption, not just for the export market. And not only to attend to, as the government has done since ’82, those sectors that produce primarily for export, like the automotive or electronics industries. So what you are talking about is a better balance between attention to the debt and attention to the needs of the people and to economic development. We need a much more balanced economy that takes into consideration not the export sectors, but economic activities designed to satisfy internal demand. And at the same time you have to dedicate far more resources, not only to those activities that export, but also to needs like education, health, housing. And specifically, we have to put into practice policies that create employment, we have to develop certain underdeveloped or backward regions of the country. … Where do you see the money coming from for investment in public health, education, and housing? In the very short term the only source I see is the funds that at this moment are dedicated to debt service. But we think that we are generating and we can generate -resources inside the country. What we would “We think that the priorities of the country, at this moment must be to improve the living conditions of the Mexican people.” call fiscal reform in Mexico would be carried out in a way that would place the greatest tax burden on those who have received the most, and on luxury items; and remove some of the fiscal burden from industries that receive the least investment. This has been a long-standing demand in Mexico, which for various reasons, but principally for certain political interests, we have been unable to achieve. So, there are resources generated by productive economic activity, there are the resources now paid to debt service, and there can be additional resources from fiscal reform. And we should also work toward a more equitable and more just distribution of wealth. Is it the debt itself that is the greatest burden or is it the austerity conditions imposed by the international lending institutions? I think it’s a combination. It’s both the resources you have to devote to pay the debt, and the restrictions. As I said, 60 percent of the public expenditure goes to the debt payment. And the austerity measures have discouraged investment. There is no investment in many sectors. Investment has been directed principally to the export sector of the economy while investment in other sectors has practically stopped. You said in your interview with Andrew Reding that the ,notes on the debt are now selling at 50 percent of their face value. So the banking community recognizes that that’s what can be repaid, or that the’ nominal value Yes, but the agreements, the decisions that have been made by multinational agencies, the International Monetary Fund, to extend additional credit to Mexico to maintain the situation have impeded them from recognizing the real value of the debt. In other words the international agencies and your own Department of Treasury have been discouraging the recognition of the real value of the Mexican debt … they’re keeping the debt alive. But at 50 percent bf nominal value, could the country begin to amortize that is to pay on the principal? Yes. You should take into account a combination of different elements. One would be to recognize the real value of the debt at this moment. But at the same time, I think that the banks and multinational agencies would also have to accept co-responsibility in having increased our debt … because in a certain moment these banks and multinational institutions knew that there was no more capacity in our economy to repay any more loans. And so debt that was incurred from that point on should receive different treatment. You must consider the debt that was incurred from that moment on as more a political issue than just a commercial or economic arrangement. So that would perhaps decrease, by a certain amount, the debt. And then you have to talk and establish new terms: How are you going to pay? Do you keep the same interest? Can you pay with pesos instead of other currencies? This combination of different elements is what you must consider. But, we know that we must pay the international debt we have incurred. We have to do that. In many ways, then, the lenders and banks have failed in their fiduciary responsibility because they knowingly made loans they knew couldn’t be paid off. If you consider the loans that have arrived most recently, they are more in this category. They are credits, that though in theory are designated for a specific purpose, are only used to recycle the existing debt. In a sense then, this is about political control and about foreign lenders propping up the government of Carlos Salinas. Would you agree to that? As a matter of fact, if you take into account THE TEXAS OBSERVER ..5.