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That may happen, and it may not. In either case, economic "integration"--the new buzzword--has a momentum of its own. Thanks to the North American Free Trade Agreement, some 30% of Mexico's economy, which has a GDP of $865 billion, comes from exports to the U.S. So linked are the economies now that Mexico shares American bad times as well as good in real time. This year the looming U.S. recession has cost Mexico a 4.4% drop in shipments to U.S. consumers. Fox was worried enough two months ago to urge Mexicans to pray to the Virgin of Guadalupe for the U.S. economy. But faced with the bad economic numbers last week, Fox simply declared, "Panicking and talking about crisis is worthless, because that's not the reality."
And he is right. It's not a crisis--at least not yet. Foreign capital keeps pouring in--$2.8 billion for brand-new projects, 60% of it from U.S. companies, in the first six months of a tough year, an increase of 1.5% over the same period last year. U.S. business had been looking for a reason to boost its south-of-the-border presence. Fox, promising to end corruption and streamline bureaucracy, provided it. Says Steve Knaebel, president of engine manufacturer Cummins Inc. of Mexico: "There's been a lot of positive news on the opening of Mexico."
The Fox Effect transcends his considerable personal charisma. Mexicans realize that their vote to end the 71-year reign of the Institutional Revolutionary Party (P.R.I.) gave their country new clout north of the Rio Grande. "Mexico is now legitimized in the eyes of U.S. institutions," says economist Rogelio Ramirez de la O. And Los Pinos-White House currents are so warm that Bush has said he would veto legislation that would effectively ban most Mexican cargo trucks from hauling freight over the border and within the U.S. Law-enforcement relations are going so swimmingly that the Justice Department has passed confidential information about impending drug arrests to Mexico--unthinkable only a few years ago--and the two countries' top cops are even talking about expanding the flow of information.
The other side of the coin is that Fox is getting better treatment from the U.S. political establishment than from his own congress. Fox's proposals to reform Mexico's loophole-riddled tax system, open up the electricity sector to foreign investment and rewrite the Mexican constitution along U.S. lines--with congressional re-election, for one thing--are stalled or have not yet been formally introduced, nine months after he began his six-year term. Fox made Mexico's tax system the first major target in his campaign to rebuild the country's basic institutions. Mexico is one of the least-taxed societies on the planet. Tax revenue amounts to only 11% of GDP (compared with 30% in the U.S.), and the country's schools, roads and public hospitals could use some of the $12.8 billion that the proposal would produce. If Fox falls short of his goal, the estimation that the man who beat the P.R.I. can do anything would slip considerably. And as a sign that Mexico doesn't want to do its part to modernize itself, the failure to achieve tax reform would discourage the U.S. from upping its investment.